Using leverage for day trading

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July 16, 2024 at 09:52 #184834 Reply
Harry_WD_WH
Can someone explain how beginners should approach the use of leverage in day trading? I know it could give me greater returns but I want to understand all the risks involved.
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- July 17, 2024 at 09:54 #184898 Reply
  Jessie_brackal
  The risks with leverage are that you could lose many multiples of your outlay. E.g. you put down €100 as margin giving you access to 20:1 leverage, or 20x. This means you COULD see returns of €2000, however you could also lose €2000.
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  - July 17, 2024 at 10:10 #184903 Reply
    WWHeiz
    Just a heads up, leverage can really crank up the impact of market volatility on your trades. When things get wild you can see huge swings which means bigger risks of taking a hit. Trust me, I’ve been there day trading with leverage – it can be a serious rollercoaster.
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  - July 17, 2024 at 10:10 #184901 Reply
    Petey_8402
    Let’s not forget if the markets don’t go your way and your account equity falls below a specific level you may get a margin call asking you to deposit more cash to keep your position open.
    
    Fail to do that and your day trading platform could liquidate your position at a loss.
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  - July 18, 2024 at 11:54 #185036 Reply
    Harry_WD_WH
    Really useful, thanks guys. I’ve been reading up on the margin call process so I feel better about that now.
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- July 17, 2024 at 09:54 #184897 Reply
  Steve
  Beginners shouldn’t use leverage. The risks of losing large amounts of money are too high when you’re a newbie trader.
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- July 17, 2024 at 10:10 #184904 Reply
  Remmy
  Effective risk management tools like setting stop-loss orders and limiting the amount of leverage used are crucial.
  
  In my humble view, beginners should also use lower leverage ratios to limit potential losses. I can access leverage up to 30:1 in Europe but some global brokers offer leverage up to 500:1 and even more. I’d be steering well clear of those as a newbie trader.
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  - July 18, 2024 at 11:54 #185034 Reply
    Harry_WD_WH
    Yeah I’m in Europe too so I’ll be sticking with the lower limits.
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- July 17, 2024 at 10:10 #184902 Reply
  DONALDTrader
  The best move is to kick things off with a day trading simulator/ demo account. You’ll get the hang of the ups and downs of trading with leverage without actually burning any cash.
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  - July 17, 2024 at 10:18 #184911 Reply
    Petey_8402
    100%. Not even just to understand leverage – just to get a feel for the markets and hone setups before risking funds.
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  - July 18, 2024 at 11:54 #185035 Reply
    Harry_WD_WH
    I’ve been using a demo account for a bit and will carry on doing so. I agree they have been useful for getting a taste of leverage trading.
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