How Much Leverage Do You Use To Trade Forex?

[ally]

Leverage enhances the account equity so it must be decided on the basis of equity one is willing to lose on a trade or what is the risk bearing capacity. As leverage is like a double edged sword if it enhances the chances of potential profit on one side then the likely chances of having potential losses are also enhanced on the other side. However, most professional traders usually consider 100x to be the optimal leverage to use.

 

[lovethetrade]

50x is the legal limit in the US for speculative trading so I'd be using that as a guide to acceptable leverage.

500-1000x would useful for companies wanting to hedge a future foreign exchange transaction.

http://www.investopedia.com/articles/forex/082813/how-leverage-used-forex-trading.asp

You need to work out the value of each pip move (similar to ticks in futures) and establish whether your account size can handle it based on your money/risk management parameters

 

[lovethetrade]

You probably also want to take into consideration the current and expected volatility of the currencies you plan to trade.