Most of the time, traders do not think of taking leverage practically. Leverage is the advantage in forex trading, where small traders can trade the market with a big spread for a big profit. For example, you are a trader in Forex. You have a small account with your broker and you have only 10 dollars in your account. You see a trade in the market and you think you can win this trade and you want to place a trade for 100 dollars in the market. Because you have leverage in forex, forex will allow you to place this trade of 100 dollars in the market though you have only 10 dollars in your account. The advantage of leverage is very large and most traders do not know how to properly use leverage in their accounts.
There are many ways which professional traders use in the market to manage their leverage in high market volatility. If you can master these tips, you can use your trading for making a larger profit in your small account. However, in order to properly master the use high leverage trading account.
Use high leverage when you are certain: The first rule of using the leverage is you have to take leverage only when you know you are certain of the market outcome. The professional traders of the introducing broker always assess the probability of the trade setup and based on that they scale their lot size in the market. Unlike the novice traders, they don’t execute random trades and loses a huge amount of money. Many traders take leverage only to see if they can place these trades in the market and how it feels to have a large account in Forex. Leverage is not your demo accounts where you can fulfill your fantasy. Use practical trades in Forex. If you are certain of your market trend and market movement, only use leverage for placing a big trade for larger profit.
To make a certain profit: There are sometimes in forex where traders can make a sure profit. For example, if you see a market trend where you can surely make a profit of 20 dollars or you can go and risk your 40 dollars for the profit of 60 dollars. Trade the market for 20-dollar fixed profit. Many traders cannot understand this and trade the market for a chance of losing 40 dollars for 60 dollars. To be precise you need to follow risk management factors in every single trade. Do not use leverage if you are not certain of the profit or if there is no fixed profit. Only use leverage to make a fixed profit in the market that you are certain of.
Conclusion: If you can use leverage properly, it will help you to maximize your profit potential in the market. When you place any trades always make sure that you are using proper risk management factors. Last but not the least never trade against the long-term prevailing trend.