The nature and risk analysis of leverage in trading

From a particular point of view, finance cashback forexex broker rebate program the overdraft future who do well, who do poorly, only than who can be more scientific overdraft future, forexbrokerrebateprogram the overdraft future itself forexrebatebest always exist, due to human nature, there are people there is a jungle and autorebateforex is a tool or rule defined by people in order to overdraft the future We can look at it from the perspective of both the trader and the trader: the more formal the trader The more formal the trader, the less likely it is to offer high leverage, and even if it does, it is a ladder, for example, for small fish and prawn retail investors, give a high leverage, but the amount of capital reaches a certain level, the leverage will be forced to reduce because once the "through position" occurs, the trader has to lose money to the liquidity provider behind, so the better the trader, the less likely it is to put itself at risk exposure, the more stringent risk control traders even to large capital The more stringent risk control traders even to large capital clients to give 1:1 leverage (i.e., can not use leverage), so that will never wear position, the trader will always be invincible, without fear of black swans this is the traders own risk management and the regular fund (or management, vicarious financial management) will certainly choose a good trader, and a good trader for large capital clients will not provide high leverage traders for traders, the size of the leverage and risk can be said to have nothing to do with There is no relationship between this statement may be very subversive for many people, right? The reason: Note: Any views stated here are based on the premise of a light position any successful trader, there is no light position, heavy position, you can make a hundred times in a row, but swept away by the market as long as once is enough "always walk by the river, will inevitably wet shoes" should be the common permission of traders so this article is only for light traders, heavy positions are not included in the discussion, the risk of certain explosion comes entirely from the Traders themselves, for example, jumping out from the first floor will be fine, while jumping out from the 10th floor will fall to his death, so the 10th floor is more dangerous than the first floor? The key is in the 10th floor when why jump, no one forced you to jump ah, will not take the stairs? The risk is self-created, the wine is not drunk! Take the MT4 platform gold varieties for example, for the decimal point after three quotes, the number of open lots = [then net value * leverage * 10] / [(1000 * then exchange rate) + (resistible points * leverage)] from the formula can be seen, no matter how high the leverage, but also by expanding the "resistible points" to maintain the number of lots of light positions, which is entirely the traders own control of the leverage is only one of the decision of the number of lots If you expand A 100 times, but also expand B 100 times, the result is still C. The initiative is entirely in your hands. 1246.052, can resist 300000 points (the last decimal point is defined as 1 point, and can resist 300000 points for professional funds is actually quite aggressive), for 500 times leverage and 50 times leverage, the calculated number of open lots are 33.06 and 30.78 respectively, it can be seen that the leverage is reduced by 10 times, but the final change in the number of open lots is minimal (leverage Note: Only in the case of very low leverage, such as 5 times, the number of open lots will have a significant drop, calculated as 18.21 lots, because the relationship between the size of the leverage and the size of the number of open lots is an exponential function graph, and not linear, leverage from 500 to 50 times, the number of lots reduced by very little, but from 50 to 5 times, the number of lots reduced by the magnitude of the expansion so that For regular funds (or custody, vicarious banking, etc.), a light position is certain, so the size of the leverage basically does not need to be considered and will not have an impact on trading (if a heavy position, i.e., the value of "resistible points" is very small, the change in leverage will have a much greater impact on the change in the number of lots, but since this is certain to die, it will not be discussed) In summary, for light traders, the size of leverage has nothing to do with risk to trade The number of lots is entirely up to you, and the high or low leverage has little effect on the number of lots opened. The essential function of leverage is only to enhance the degree of trading results, to promote the speed of success or failure if you win, then expand the war; if you lose, then accelerate the defeat of the common point is to make money faster, lose money faster, so that you can be revealed as early as possible but the leverage will not change the nature of the results, earn will not become lost, lost will not become earned success or failure, only depends on the traders philosophy and operation, with In reality, leverage is often labeled as a negative tool. In fact, even when trading without leverage, the vast majority of losers always find excuses for their failure and blame it on leverage, so leverage becomes the scapegoat. In fact, from the macro point of view of life, high leverage is beneficial to make people who could have made money faster, people who can not make money lose it all as soon as possible, in time to wake up, so as to realize that they are not suitable to participate in this market, as soon as possible to devote their time and energy to other things if high leverage with a year to lose it all, and because of low leverage consumed ten years to lose it all, although in the short term will not suffer The sudden blow, but for life is the same as a disastrous end, but cost more life engaged in meaningless things However, from a political point of view, the state will certainly advocate low leverage, even if the state knows that for traders long pain is better than short pain, but still hope that the majority of traders in the low leverage of the warm water boiling frog effect, to avoid the emergence of short-term big losses, in order to maintain social stability