Leverage Trading Explained (Forex, Stock, Crypto) in depth! [Tips and Tricks] BITCOIN LIVE EXAMPLE

Hello fellow traders it's Rafal Zuchowicz and  welcome to my channel. In today's video we will   talk about extremely important and underestimated  by traders topic leverage why am i making this   video because I've been in touch with some  people recently that they are very excited   about this hype with cryptocurrencies forex and  the stock now in 2021 it's crazy like in 2017,   but they don't understand leverage and they killed  their accounts within one week so it's very sad   very upsetting because that's their savings so,  i decided to make this video there is one already   on my channel the previous one very short one but  in this one i want to get in very like deep topics   so whether you are a beginner or an advanced  trader, I think you will find a lot of good   information in this video so let's talk let's  see if leverage is a blessing or is it a curse what will you learn in this video so as i said we  will talk about first we define what's leverage   we will go through examples so it's easy for you  to digest to understand if you are the beginner   but i know that a lot of experienced traders  they still don't know how to use it how it   really works so this is very surprising how to  use it why to use it how not to use it we'll   talk about tips and tricks so make sure you stay  until the end because i will teach you something   and how to set it correctly in your trading  platform this is very very important because your   trading platform it can tell you exactly where you  are how much you're risking and you need to learn   how to use your tools so what is leverage  leverage is the ratio between the amount of   money you have on your trading account and the  amount of money you can trade this is different   so leverage allows you to trade positions larger  much larger than the amount of money in your   trading account this is very important  sentence you will see on how many levels   leverage is expressed as a ratio one to x number  and we will see how it works let's go through some   leverage examples we will use 100 dollars  account let's say you have a small account   or you don't want to put a lot of money  on your trading account you want to learn   and you want to see the power of leverage if  you decide to have one to one account you will   be controlling only 100 no brainer here so if  you decide to buy shares worth 25 dollars each   then you would be able to buy two of those if you  decide to have account with one to five leverage   then you will be controlling 500 so 1 to 5 that  means that 5 times more so you would be able to   buy 20 of those shares which is quite a lot  already not 2 but 20. now if you decide to go   with one to 100 you can control assets worth  ten thousand dollars of course this won't be   possible with controlling shares but maybe  there are some brokers that would allow you   but this is mostly for forex trading one to 100  these bigger numbers next one one to 500 and   that's possible of course as well i know it sounds  crazy but they are even one to one thousand one to   two thousand used to be these days um it's not so  easy to get a trading account with 1 to 500 i will   leave the link below for you if you want to open  one to 500 and experiment then you can control   500 times more than you have so fifty  thousand dollars amazing you've got only   one hundred dollars on your account you just  put 100 and the 50 000 is what you can control   so what does it mean for us that we  can control all these big numbers   we can make or lose money much quicker in that  way so let's go again through some examples   if we have this 100 accounts with the one to  one ratio we can open a none a lot so it's   called nanoload which is 0.001 with the with  like no leverage so basically one two one we   decided no leverage and then on eur usd let's  use this with this currency pair as an example   one pip would be worth a 0.01 dollars so one cent  so to make one dollar we would need to make 100  

pips so 100 pips movement would earn for us  uh one dollar and the peep is the fourth digit   after the comma so it's quite a move it's a  it's doable during one day but as you can see   that would give us only one dollar so one  percent of our account which is not much   but now if we decide to use the account  with 1 to 100 which is possible with   trading forex so now our 100 accounts you we  can already trade one mini lot which is 0.1   and that means that one pips is worth one  dollar so every movement of one pip will   gain for us or we will lose one dollar so  making 100 pips we will make 100 dollars   easy now if we use the 1 to 500 and  we max up so we will use a half a lot   in that case because we are controlling 50  000 that means that one pip movement up or   down will be worth five dollars so making  a 100 pips would make us richer 500 dollars   so this is quite exciting isn't it if you you just  invested 100 and using this massive leverage you   can go all the way to 500 so that's why forex and  the leverage um instruments are so popular among   traders retail traders with small accounts  because they can make money so quickly   really like 100 pips movement with a good news it  can move very quickly and then you can have 505   times more than your account and recently like  two days ago or i think yesterday i spoke to   one of my subscribers he was very excited that  he made a 100 of his account using one of the   strategies from my youtube channel and he was  thanking me for that but i told him like listen   if you made 100 i think you are over leveraging  your account and half an hour later he told he   told me you were right i just lost this and this  much because i use the too much of a leverage so   you need to remember it work it works both ways  so leverage is a double-sided sword exactly   you will be losing your money with the same speed  so the subscriber of mine is a very good example   you need to remember this always that it's not all  only working up making your account but as well   damaging your account plus bear in mind that  starting every trade you are already on a losing   position because you've got the difference between  the ask and beat price so so called spread so you   are already minus one or two pips let's say let's  say one pip so five dollars already minus five   dollars so bank bank this is a warning for you you  need to be really really really careful with the   leverage and that's why i'm making this video  to warn you guys and show you how to use it in   a smart way let's go through a losing examples as  well so we can make our lose money much quicker   so 100 accounts 100 account with one to 500  a half lot so one pip worth five dollars if   the price goes back 20 pips so before we were  trading and it went 100 pips in our direction   but of course it doesn't have to go in our  direction it can go again it can go against   us and it takes only 20 pips not even only 20  people because with the spread you are already   minus so even less than that and you lost 100 and  100 this is your account so zero you don't have   account at this point just 20 pips just 20 percent  of what you were aiming in the previous example   so this is how it works you need to bear in  mind always that this is double sword double   sided swords and you can lose money very very  quickly as quickly as you are making this money   very often traders would ask me what  leverage should i choose or should i use   so there are two different questions  actually because you can choose the leverage   up to the maximum so one to five hundred on your  account but it doesn't mean you will be leveraging   your positions one to five hundred these are two  completely different things what leverage you are   using and what leverage your broker allows you to  use so for example if you have this account with   one to five hundred and you deposited one hundred  dollars as we said in the previous example you can   trade half a lot euro usd but you don't have  to do that you don't have to go to the maximum   and trade half a lot you can trade still none  a lot a mini lot micro lot you name it you can   just go much smaller use one to one leverage  or you can use one to ten leverage one to   30 leverage you don't need to max out but  you can have it available on your account so   the leverage works not only for the certain  position so not only will allow you to to trade   big in this one position that you started with but  it means that it will leave more margin for you   for the future trade so for example if i have this  half a lot a possibility to trade on euro dollar   i can open just 0.1 of lots and i still have  0.4 available for me to trade so if i decide   that okay there is a confirmation of this trade  i want to add i want to make a pyramid that's   when i can use the remainings or i see another  opportunity on australian dollar to new zealand   dollar for example and i want to go long on this  one then i still have some money left to to trade   so you don't need to max out everything in  one trade not even in in 10 trades it's up   to you this is just the maximum available so it's  quite tricky still because there's a psychological   aspect to all of that when you have this one  to five hundred and you are a smart guy you   don't use 1 to 500 you just have it available  but you are trading with 1 to 50 for example   a using just 10 percent of what's available but  then the trade is going against you this is the   biggest mistake that traders do and how they  wipe their accounts and then you have this   leverage this one to 500 available so you add  another position because you think that you will you will like average the price in your favor and then the trade goes even  more against you so then you add another   position because you think that no no this this  has to go in my direction i'm sure about that so   then you are minus more and more and more and  because you have large leverage available on   your accounts and you are like completely stupid  at this moment you don't know what's going on   you are losing money and you're trying to rescue  your accounts rescue your trade you keep adding   to this losing position but imagine you didn't  have this leverage you were restricted only to   1 to 21 to 31 to 10 then you wouldn't be able to  make this stupid decision let's call it stupid and   you would survive because your account your i  mean the trade would need to go really a lot   pips against you for you to lose your account  but because you are adding to new positions   then it doesn't need much to wipe you out so this  is the thing that let's sum up one to five hundred   you don't need to use everything you can use  smaller but sometimes you keep forgetting you   don't know what you are doing even the system  might be tricky your platform you restarted   your platform you were trading just mini lots but  then your platform restarted and it put one lot   you were in a hurry you traded you didn't check it  i know stories like that as well a friend of mine   in front of my eyes she plays the trade on five  lots and she lost everything basically because she   uh she could put this five lots the leverage  allowed her to do that but she shouldn't   she shouldn't have done that and the  trait went completely against her   she didn't close it she was waiting for it  to come back and it wiped out her account so   unfortunately sad story but that's how it works  if she wasn't allowed to to have it then it would   never never happen so my advice is actually to use  smaller with experience i learned that that it's   not worth to you to use all this massive leverage  unless you have a specific strategy for that   and you want to be very aggressive you know  what you are doing and you know either all or   nothing that that's your that's your policy  then be my guest go for the large one okay no need to deposit all your funds this is the  another idea you don't need to put everything   at once in your account you can have for example  you have one thousand dollars that you want to   trade but you can use 100 put 100 on  your accounts keep 900 on the site   and use the leverage 1 to 10 and now you have  1 000 available on your account right right   but you might say yeah but i was thinking  you know putting 1000 and using 1 to 10 on   1000 okay so put 100 and use 1 to 100 leverage and  then you will have your 1000 on leverage 1 to 10   but if the trade goes against you if you act  like in a stupid way then you will lose only   100 and you will still be in control of this  900 that are on your bank in your bank accounts   on your pocket and you can put another hundred  next time once the emotions are gone related to   this particular trade so  this is very good strategy   i should actually make a separate video on that  one explain it properly so bear that in mind so pros and cons of leverage so no need to have  all your money in the brokerage account so this   is good thing if you have a leverage you don't  need to use everything you can just put a little   a little bit and have control over the rest in a  safe place uncapped unlimited profits so with the   leverage as far as the price goes in your favor  that's how much you can earn it can go up to the   sky basically um to the moon some would say and  then you can earn really loads of money so um   limited loss this is good things that you can earn  a lot but lose only so much of course only with   the right broker because some of them might not  allow you i mean they they might put you in minus   they should close it but there might be slippage  so be careful make sure you use the right broker   you can quickly wipe out your accounts that's the  thing so that's what we said this is the accounts   on the cons side with the big leverage  starting the trade is you are already   on a little bit of minus um because of the  difference and then you know very quickly   20 pips move as we said before in  our example and your account is gone do i have to use it no you don't  have to use it you can choose   what leverage your account would  have a so when you choose the account   you are choosing it with the broker that I'm  using that you see me using on the on this channel   there is a 1 to 30 you can get up to one to 100  but you need to prove that you are a professional   trader and i think this is very smart they are  very responsive being very responsible doing that   because anything one to thirty is already plenty  it's really really pretty trust me having one to   five hundred doesn't mean you have to use it  to the maximum that's what we said before you   can have one to five hundred but you can use much  smaller leverage actively so it's it's not a must let's jump into the trading platform now i have just opened a ticket for euro usd and the  information card for euro usd as well and from the   information card we can see that our leverage on  my account is 1 to 30 and as i said before this is   plenty it protects me from making stupid things to  over leveraging and 1 to thirty it's already a lot   and it means that i only need three point thirty  three percent of all of what i want to trade   so that's uh the size of my margin  let's have a look at the tickets   and what it means in in practice so it means  that if i want to trade one lot which is a lot   that's a 100 000 euro value if i want to make a  trade of this size i don't need 100 000 i only   need my account is in british pound so i only  need 2880 british pounds on my account and i can   already control 100 000 a euro and if we  want to see what it means in making profits   that means that the pip value would be 7.14  british pounds so each time this digit will this   six will change to seven eight i will be earning  every time seven point uh fourteen ah there's   some commission spread so it tells you zero point  two that was the spread i was talking about that   just by opening a a trade you are already minus  so in this case you are minus a 143 british pound   because there is a spread involved in this trade  and some daily daily swap but what's interesting   we can set up the stop loss and take profit so if  you are not familiar with leverage you don't know   what leverage you are using and what it  means for your take profit and your stop loss   it's very useful to use this kind of cards  by placing a trade instead of just placing it   you know from the quick card on the left hand  side so now i can set the take profit and i can go   pip by peep or just you know if i want a 100  pip straight i just need to change this one   digit and it already sets here you see 100 pips  profit and it tells me that i would earn 714   almost british pounds having on my account uh only  2880 so that's plenty i would have seven over 700   uh risking only only this one making i mean not  risking but having as as a margin because the risk   i set up in a separate window so this is my  stop loss and let's say i play a trade way   one to two so meaning that i risk 1 to gain 2  so if i'm gaining 100 i will be risking here 50   50 pips and doing so if i hit the stop  loss that means i would lose a 357   british pounds so half of of this one am i right  something around because there is this spread   so you know exactly how much you are risking and  if you are willing to take this risk because it   might be a lot for you 356 if you have only 2 880  on your on your account but this card is here for   you and you can see um the risk that you are that  you are taking you can drop all these values if   we can go to 0.5 then everything will change and  you can see that now you will be gaining only 356   and if you lose you will lose much less so that's  how you can control if you if before you made the   real realization that okay this is too much i  don't want to lose so much if if the trade goes   50 pips against me so either i'm changing my pip  size and then i'm losing less 214 i'm risking not   losing because we this is not the losing trade yet  i'm risking much less but you might this might be   not enough 30 pips for the currency pair that you  are trading you might need to set it to 50 pips   but if you are not comfortable with  such a big number then it's easy just   change this one you can either change one by  one and you can see how it's changing so you   can see that half a lot you are risking 178. if  this is too much you can go lower you can go and   drop the risk at this point so you  can put only okay i want to risk 100.  

so then it tells you that okay if you want to  risk 100 just minus i mean 28 pips but as we said   before now we want 50 pips so this is your risk so  you need to change the volume you need to change   your your leverage so don't go mad to the  maximum with this leverage and then you go to   just experiment 0.3 you can go 0  27 uh 28 and this gives you a 99   pounds of of risk and you might be happy with this  one then your margin would be a 806 and you might   have on still on your account is 288 that was  before but you don't need to go to the maximum   you don't need to squeeze uh everything  from your margin so from your account so   this merging is basically what size of your  account you have and for example, you have   ten thousand so you are can see uh we can see here  that with the ten thousand pounds how much you can you could okay three-four so  around three uh 75 let's say 70 60 3.5 45 okay so around 345 this is the  maximum if you have 10 000 British pounds   but then again you don't need to always  go to the maximum you can lower it   and you will have all the numbers  here so come to this platform   uh link below if you don't have a platform that  allows you to calculate all these things there   are some online calculators you can refer to  that leverage calculator the pip calculator   in the platform I'm using everything is built-in  already and it's easy as that so I think 1 to 30   is plenty be careful with your leverage that's the  main message here just protect your profits let's   have a quick look into the bitcoin as an example  of the power of leverage in both ways so let's say   you entered at this scandal at the bottom with  leverage one two three so you got your bitcoin   from 11 300 let's say 11 000 and now it's at  56 000. so you made a 45 is 45 000 on each   leverage so one two one one two two one two three  so you made three times forty-six thousand so you   made 130 uh 000 if I'm calculating right and  you are a rich man so instead of making this   only 46 000 only you made so much but imagine  you did the same trade you missed this movement   your friend told you that he is in  this movement and you are super excited   uh he made already all this money the price is  at 42 000 he entered at 11. he's telling you man  

I made 41 000 already profit it's crazy four times  my investment this thing is going up to 100 easily   and you are like screw it, I want to be a  part of this movement but since he already   made so much so if I just enter one to one  I will never catch up with him so let me   enter with the leverage one two three only one two  three and the price was at 42 000 at this point   and you were unlucky to enter at  this local top the price made a small   pullback just two candles weekly  candles but just two candles it made a pullback to 28 so it's 14 000. which  means it's 30 and you entered one two three   at that moment this 30 per cent just  wipes out your accounts and you've got   zero so the bitcoin that you got for  you spent forty-two thousand here and   the pullback of fourteen thousand  fourteen times three gives you exactly 42   and goodbye depot so you just lost 42 000 and  later the price beautifully went all the way   up to 57 giving 15 so 45 000 profits if you  didn't miss uh on this opportunity so this is   the power and we are talking uh talking only about  leverage one two three not one to five hundred as   i mentioned before you just leverage three times  your money only three times and this for two weeks   was enough to to make you lose forty-two thousand  dollars so think about it um and consider this   example with uh as a warning let's let me put  it this way okay all the best with your trading   uh use your leverage uh to your advantage  and make loads of money take care bye you

2021-02-23 18:30

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