Leverage is able to present both positive and negative results to traders, and this really depends on the ratio chosen and the strategy applied. That is why it is so important to determine effective leverage guided by adequate risk management. Top traders generally use stop orders to limit the risk of loss when trading forex. 1% margin is the most common recommendation for each trade. In addition, the choice of brokers affects the level of risk that you can take. Therefore, if you are very confident, you might want to visit http://www.cnie.org/highleverage/regulated-forex-brokers-with-high-leverage.html to find excellent brokers with high leverage.
As for the overall equity account, the recommended risk is not more than 5%. Furthermore, successful traders always apply the risk and profit ratio to try to find the highest chance of winning trades. Hence, it is vital to avoid any mistakes regarding leverage.
Margin is the minimum amount of money required to use leverage in a trade. One thing that is quite close to margin is the concept of a margin call, which traders always avoid. Being lazy to understand margin can cause a trader to lose heavily because it is so crucial.
Margin is the amount of deposit a trader places on a trading account to initiate trading. Specifically, margin refers to the specific amount required by a trader in a trading account to open new positions in the market.
In general, the margin is made as a percentage of the trade size, this is why it is so important to understand the concept of leverage. Margin and leverage are closely related because the more margin a trader requires, the less leverage a trader will need in trading.
This is why a trader must give more capital from trade with his own money, and therefore only borrows a little capital (leverage) from the broker. Leverage has the potential to generate large amounts of profit, as well as large losses.
That is why it is crucial for every trader to use leverage more responsibly. Always remember that leverage always varies among brokers and varies from region to region depending on the conditions required by the government.