One of the biggest advantages and risks of Forex trading is leverage.
Investors use leverage to considerably increase the returns on their investments. However, leverage also increases losses, as it magnifies the movements on the currency market – both upwards and downwards. That’s why leverage is often called a “double edged sword”.
Leverage will allow us to take advantage profitability when the favor goes with us. But using leverage without proper education will be very risky and we might incur a bigger losses due to its multiplier effect.
As much as possible our aim is to be in the game for longer time, investment is not a competition and as much as possible we earn reasonable amount and consistent enough is favorable and we can still trade more in the future. We might start doing x5 to x10 as a starting point and eventually increasing it once we fully understand how and when to use it.. On top of possible losses we also pay overnight fees. We all make mistakes but it is not too late to make adjustments and lower the risks in our future trades. Greed always lead us in troubles.
Example of possible scenario: