With leverage most probably you will lose your invested capital

Small trades matters. If you do big leveraged trades you will not be able to keep them for long (unless you have free available money outside of you trading account, to support safe margin levels and your large trading position).

When you do small not leveraged trades, even if the market goes against you, you have the option to recover, and to close the position in profit.

Example:

When trading FX Currencies, an investor borrows one currency to buy another. In order to hold the position overnight, you may pay a fee, which also known as “rollover rate” or “swap charge”.

If you purchase EURUSD contract with 10 lot volume, and you are holding the position overnight, your fee (rollover rate/swap charge) can be 0.0002*10*100,000 = 200 EUR (assuming your account base currency is EUR). 200 EUR fee may cancel all the profit you earned from the position, or even create you a loss.

Imagine that you deposit 500 EUR in order to open the above-mentioned position, and the market go against you, the result will be, most probably, that you will lose your 500 EUR invested amount.

If you were less leveraged (for instance, 0.5 lot volume and not 10 lot volume), than you are in a position to keep the position open for longer term, bear the overnight fees, and wait until the market goes to your direction/prediction.

Leveraged financial products are excited, but you need to be careful if you want to use it. BTW, you will also need luck.

The information contained herein does not constitute investment advice, or an offer to sell, or the solicitation of any offer to buy any financial instruments.

It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future results or expectations. Past performance has no predictive value and is no indicator of future performance.

As with all investments, there are associated risks and you could lose money investing – including, potentially, your entire investment. Prior to making any investment, a prospective investor should consult with its own investment, accounting, legal and tax advisers to evaluate independently the risks, consequences and suitability of that investment.

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