What's the maximum amount of leverage a trader should use?

[nwoptions]

Stanley Druckenmiller, who is featured in Jack Schwager's "The New Market Wizards" said in an interview that the maximum amount of leverage a futures trader should use is 4:1.

Do you agree?

What do you consider to be too much leverage?

 

[maler]

There is probably a lot of wisdom concentrated in that answer. The right leverage depends on the strategy you are trading and on you own psychological makeup.
A math guy can find the leverage for optimal compounding but using that is asking for trouble because any change in the market conditions unforeseen by your analysis could wipe your capital. Always use only of fraction of what you think your optimal leverage is.

I think it was Bruce Kovner that said whatever you think your leverage should be, go with half that.

 

[mervyn]

He says basically nothing. Reg-T by default is already 4:1. Futures market you need to post overnight margin, instruments themselves are highly levered.

 

[Slow Learning Elf]

Stanley Druckenmiller, who is featured in Jack Schwager's "The New Market Wizards" said in an interview that the maximum amount of leverage a futures trader should use is 4:1.

Do you agree?

What do you consider to be too much leverage?

What’s your turnover? Are you trading outright or spreading? If you’re trading spreads, do you get margin offset? How volatile is your product?

The whole “you should never X” is invariably stupid and taken out of context

 

[Picaso]

Stanley Druckenmiller, who is featured in Jack Schwager's "The New Market Wizards" said in an interview that the maximum amount of leverage a futures trader should use is 4:1.

Do you agree?

What do you consider to be too much leverage?

You also have to consider short/long term, the type of strategy (and expected drawdowns), number of non-correlated strategies being deployed and the ATR.

X4 may be good for funds using long-term trend-following strategies.

For retail intra-day traders, as a *maximum*, it seems a bit low, IMHO.

 

[maxinger]

Stanley Druckenmiller, who is featured in Jack Schwager's "The New Market Wizards" said in an interview that the maximum amount of leverage a futures trader should use is 4:1.

Do you agree?

What do you consider to be too much leverage?

Different people have different opinions.


4:1 leverage is far too low.
I'd recommend 50:1 or higher.
Then you don't have to put tons of money into your trading account.
Whatever it is, make sure your trade plan talks about max lot size you can trade.

For those who have a serious problem with overtrading,
even 1:1 leverage wouldn't fix his problem.

 

[Handle123]

Scalping ES, I use 5K per lot.if markets ever close again like 911, I've good to recover.
But for long term futures I use double overnight margins.

Forex is matter of one's consistency.

 

[schizo]

Stanley Druckenmiller, who is featured in Jack Schwager's "The New Market Wizards" said in an interview that the maximum amount of leverage a futures trader should use is 4:1.

Do you agree?

What do you consider to be too much leverage?

Maybe I'm just retarded, but I can never think in terms of "x times leverage". For me, it's straight up lot size per trade (eg. 10 ES lots per trade). Am I the only trading imbecile here?

 

[Franziskaschulz]

if you are trading forex, in my opinion, the bigger the leverage is, the better it works;as long as your risk management is fine, but if you are trading crypto, i really suggest u avoid high leverages, do notttttt use any more than 10. I personally use 1:1 for crypto or i trade spot, 1:2 is the max leverage that i have traded real money on crypto with.

 

[murray t turtle]

There is probably a lot of wisdom concentrated in that answer. The right leverage depends on the strategy you are trading and on you own psychological makeup.
A math guy can find the leverage for optimal compounding but using that is asking for trouble because any change in the market conditions unforeseen by your analysis could wipe your capital. Always use only of fraction of what you think your optimal leverage is.

I think it was Bruce Kovner that said whatever you think your leverage should be, go with half that.

%%
SOUNDS right; may want to use more when younger\a blow up account then maybe can be replaced.