why should i use low leverage when trading forex, any advantages?

@emma_durban - 7 months ago - Risk Management

I hear alot of talk about using low leverage in forex trading but what are the real advantages? is there anything to benefit from lowering the potential profits i would have made when using high leverage?

@quentin_ubuma - 3 months ago

The benefit of using low leverage is that it helps prevent you from over-trading and blowing up your account. Low leverage brokers require you to deposit a larger amount of money as collateral, before they allow you to open a trade.

Now, if you just sustained a huge loss from a trade, your low leverage broker will not allow you to open another trade if your account balance is insufficient to meet the collateral (margin) requirements.

This helps to keep you from over-trading or revenge trading where you try to chase a loss.

@dipuo_kefilwe - 3 months ago

Reducing your leverage will force you to trade smaller lot sizes which is good risk management especially if you are a beginner.

@vickyjoseph - 2 months ago

Low leverage ensures you don't make silly trades because every time you want to open a position, the broker will ask for high margin collateral. Low leverage helps you become a more serious trader instead of just gambling away.