400:1 Leverage
- Thread starter jkhek21
- Start date
I couldn't agree more!
You wouldn't blame a car dealership for a drivers bad driving.....
So would I but they're not doing that, they're saying come and look at this shiny new Boxster with a top speed of 170mph - "Like a shot of adrenalin. Intravenously"
Unlike brokers who clearly warn of the potential dangers of leverage, Porsche dealerships don't tell you that you'll probably kill yourself if you actually drive it at 170, they assume you should already know that otherwise what the heck are you doing driving!
Maybe Porsche should put speed limiters on their cars to protect us from our own reckless stupidity
Quote from cabletrader:
So would I but they're not doing that, they're saying come and look at this shiny new Boxster with a top speed of 170mph - "Like a shot of adrenalin. Intravenously"
Unlike brokers who clearly warn of the potential dangers of leverage, Porsche dealerships don't tell you that you'll probably kill yourself if you actually drive it at 170, they assume you should already know that otherwise what the heck are you doing driving!
Maybe Porsche should put speed limiters on their cars to protect us from our own reckless stupidity
Funny enough, in most of Europe the cars come fitted as standard with limiters. Mind you 155 mph is way beyond the speed limits apart from Germany but it is for the very reason that above that speed requires uncommon skill.
400:1 is a great way to attract newbies and a few inevitable stops- outs is game over.
Exactly, but then what is a fast-buck-thrill-seeking newbie doing in the market anyway, surely he's not seriously expecting to make any money?
If anything these >400:1 brokers are doing newbies a favor, they'll lose their money real fast instead of having a long and painful drawn out nightmare at <20:1
Quote from cabletrader:
So would I but they're not doing that, they're saying come and look at this shiny new Boxster with a top speed of 170mph - "Like a shot of adrenalin. Intravenously"
Unlike brokers who clearly warn of the potential dangers of leverage, Porsche dealerships don't tell you that you'll probably kill yourself if you actually drive it at 170, they assume you should already know that otherwise what the heck are you doing driving!
Maybe Porsche should put speed limiters on their cars to protect us from our own reckless stupidity
Sorry, I cannot agree with your comparison of inherently built in understanding of fast speeds and injury to leverage and forex.
I think everyone needs to chill out a bit about Leverage levels. First of all, some people like to gamble and throwing 3 or 4 grand in an account and taking a shot at a score is the whole point of these Forex shops. One could even make the arguement that a new trader who has a negative expectation profile, would be better served by trying to make a big score off of a few overly leveraged trades than grinding out 100's of small trades. Kind of like if you want to win 10,000 dollars at roulette you have a much better chance of doing it by betting 10K once than 50$ 200 times.
Not everyone is trying to be a career trader, control volatility, and achieve an impressive Sharpe Ratio. Is this wise? Probably not, but this is America, for the time being irresponsibility with one's own money is still legal.
And of course, if one were truly responsible and very risk adverse, the higher the leverage offered, the safer your money can be actually. Let's say you were a client of Refco, you could have kept a token amount of margin in your Forex account, Purchased T-bills with your total risk capital, parked the Bills in a segregated and legally gauranteed Futures account, and made transfers back and forth to fund your day to day trading. I would wager there are more than a few Refco customers who wish they had done just that.
I guess it's easier to just decry low margin requirements, sound like a disciplined trader, and not think things through. All I can say is that I wish IB offered 1000 to one. I could trade real prices, with a true ECN, and by storing my base capital in a regulated futures account eliminate 99.99999999% of my counterparty risk!!!
Just my two cents.
FJMcC
Not everyone is trying to be a career trader, control volatility, and achieve an impressive Sharpe Ratio. Is this wise? Probably not, but this is America, for the time being irresponsibility with one's own money is still legal.
And of course, if one were truly responsible and very risk adverse, the higher the leverage offered, the safer your money can be actually. Let's say you were a client of Refco, you could have kept a token amount of margin in your Forex account, Purchased T-bills with your total risk capital, parked the Bills in a segregated and legally gauranteed Futures account, and made transfers back and forth to fund your day to day trading. I would wager there are more than a few Refco customers who wish they had done just that.
I guess it's easier to just decry low margin requirements, sound like a disciplined trader, and not think things through. All I can say is that I wish IB offered 1000 to one. I could trade real prices, with a true ECN, and by storing my base capital in a regulated futures account eliminate 99.99999999% of my counterparty risk!!!
Just my two cents.
FJMcC