How much leverage are you comfortable trading in FOREX?

Does anyone have any suggestions on a leverage limit?

Many FOREX brokers allow up to 200:1 leverage. My trading strategy is to take just very small gains (3 or 4 pips at a time) and set the stop losses way out there just to avoid a total wipeout. I never trade on Fridays either and of course close out before the market closes.

Because of the giant stop losses, I am only comfortable with around 20:1 leverage or maybe 30:1.

In other words, with a $500 margin account balance, I would only consider buying 0.1 lots of EURUSD (10,000) at a time; 0.2 lots with $700; 0.3 lots with $1100 and so on...

Does anyone out there use the same strategy as me and feel comfortable with higher leverage like 40:1, 50:1 or even higher?

As you indicated, it is not just your leverage that you need to take into account...it is also your margin level that is important.

When I am drawn back to my technical analysis days I usually use a leverage of 40:1 unless I have a high probability setup occurring (based on pivot points and fibs). In that case I might go as high as 100:1.

Currently the majority of my Forex activity is based on conservative hedge trades (usually hedging the EUR/USD and USD/CHF). With my hedge trades I use a leverage of 400:1 and a margin of 10%. Hedging is awesome because the position can make profit regardless if the market goes up or down. I also get paid a daily interest payment, 7 days a week.

I have an analysis of the daily performance of 5 different hedge strategies over the past 500 days if you would like to see it. And these were all at 400:1 leverage and never anywhere near a margin call.

Paul

I also, do a 200:1 leverage and usally take small gains at a time.

Forex is too dangerous for my liking, but I know a professional Forex trader, that says most people get into trouble because of using too much leverage. So take that for what it is worth. Good Luck

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