I use leverage on a daily basis...that's what it's there for; however, I only use a couple k so I can afford the stock I wish to trade.
How often do you use leverage?
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for me trading futures. margin/cash ratio should never ever go above 30% NEVER.
How do you define "at risk"? At risk is not the same as "in use". I routinely have a few million dollars in positions on pretty much all the time. I could be levered 20, 30, 50:1 my account equity. The risk, the amount I expect I could actually lose, is measured in the thousands though.
I think this is the point about leverage and professional buying power that a lot of people don't understand. The way to use it is not to swing for the fences on one trade. It's to try to take tiny bites out of many many positions. Lots of money in play, spread around the market, trying to eke out small returns. I doubt you'd find many professional traders who've been around a while who would take a bet that would really hurt them if they're wrong, no matter how good the odds are.
I think this is the point about leverage and professional buying power that a lot of people don't understand. The way to use it is not to swing for the fences on one trade. It's to try to take tiny bites out of many many positions. Lots of money in play, spread around the market, trying to eke out small returns. I doubt you'd find many professional traders who've been around a while who would take a bet that would really hurt them if they're wrong, no matter how good the odds are.
Trading with all your leverage is like maxing out your credit card. Unless you know what you're doing....probably best not try.
i dont understand what's the big whoop. we are not talkin' about multimillion dollars acct here. if u have 25-50k or even 100k+acct and trade stocks AND want to make decent money u'll find uself at times leveraged to the max with just a few thousands margins to spare for your runnin' losses. i mean, if u dont take advantage of that ridiculous 4/1 treg u cant expect to make much more than walmart wages.
I've been thinking about this thread and about what I said above. I should probably be using more leverage, because right now I only use about 2/5's of what I have available. The rest just sits there in cash not being used. Would I be a better trader if I utilize all my capital?... Use all my cash and margin, and spread it out over two or three positions to help off-set risk. doesn't seem like a bad idea.
There is absolutely nothing wrong with creating wealth slowly. Double your money every 4 years and you will be very wealthy and you will stay out of huge drawdowns. I very rarely ever have more than 60% of my funds invested at one time and I am still able to get 20% yearly returns. You were correct in your original assessment of buying stocks on credit.
When you have small account balances it seems as though you have little to lose so people with 5-20,000 accounts use leverage all of the time. Every dollar counts though, and blown out accounts do damage to both your pocketbook and your psyche. It's just like the lottery. People throw away 20 or 30 dollars a week with 20 million to one odds when they could be investing that money. It makes no sense, but people do it all of the time because they have no plan in life and they think that is their only chance they will ever be rich.
When you have small account balances it seems as though you have little to lose so people with 5-20,000 accounts use leverage all of the time. Every dollar counts though, and blown out accounts do damage to both your pocketbook and your psyche. It's just like the lottery. People throw away 20 or 30 dollars a week with 20 million to one odds when they could be investing that money. It makes no sense, but people do it all of the time because they have no plan in life and they think that is their only chance they will ever be rich.
Can you throw a video of you using max leverage up on YouTube? Maybe play some fighter pilot music or maybe have it like a gambling casino. Have a closeup on your face and say "Im going all in". Maybe do the Hulkamania thing and then have the screen flash "maximum leverage" after you hit the switch.
Then when you make the big cash, stand up and tear off your shirt and flex like the hulkster.
Then when you make the big cash, stand up and tear off your shirt and flex like the hulkster.