Can you set your leverage manually at ActivTrades as of November 2023?
Leverage helps you increase your trading position, but is a two-way street: you can amplify your profit, but you can also multiply your losses. And it is especially important if you trade CFDs, which is an instrument that allows you to take advantage of leverage. One option to better control your risk, is setting your leverage manually when taking your trade position. We have checked if it is possible at ActivTrades!
We have great news! ActivTrades allows you to set your leverage manually.
- Setting your leverage manually helps you better manage your risks.
- It helps with setting your position which better reflects your needs and trading habits.
- You should always think about whether you can handle losing the full leveraged amount not only your margin, this should be the benchmark on setting up your position.
- Most trading platforms set the leverage automatically to the maximum allowed.
Even if you can set the leverage ratio at ActivTrades, choose your trading strategy carefully. We at BrokerChooser want to help you better understand the financial world. You can be sure that we only recommend brokers that are overseen by top-quality regulators.
63-81% of retail CFD accounts lose money
What is the leverage and the margin?
Leverage basically allows you to control a larger amount of money with only a fraction of the total amount. For example, if you want to invest $1,000 but you have access to leverage of 10:1, you can control $10,000 worth of investments with your $1,000. As you can see, leverage allows you to trade CFDs with a smaller amount of money and increase the size of your trading position. It might multiply both your potential profits and losses, so be careful when using it.
Margin is the amount of money you need to have in your trading account in order to open and maintain a leveraged position. The purpose of margin is to make sure that you have enough funds to cover any potential losses that may occur. If your losses start to eat into your margin and it falls below the margin level, a margin call may be triggered. A margin call is a request from your broker for you to add more funds to your account to meet the required margin level. If you don't meet the margin call, your broker may close your position to limit the risk.
If you are wondering how leverage works in CFD trading in detail, check out this article by one of our experts to find out more about the potential risks and rewards.
Let's see how you can control those positions better by setting the leverage manually!
How to manage your risk when trading with leverage?
You can set your leverage manually at ActivTrades, which means you can better manage your risk, according to your own trading habits and risk tolerance. Keep in mind that brokers usually set the limit to the maximum automatically, and it is worth setting it smaller than the maximum leverage. So you should always check the leverage position the broker sets by default.
This option helps you protect yourself from taking a larger leveraged position before actually learning what it feels like and what it takes to trade with leverage. It also gives you an option to learn about the price movement of the underlying asset of your CFD, and what that means for your leveraged position.
There are other ways to protect yourself from taking too much risk:
- First, you should always consider if you can handle losing your leveraged position, and don't only focus on the margin requirement that needs to be on your account to take up the position, or how much is actually on your account. If you have 1:20 leverage and you take a $1000 position with $50, consider whether you can afford losing $1000, not $50. Although the broker will come with a margin call at $50, your mindset should adjust to the larger risk. CFDs are risky instruments, and you could be losing money especially as you learn about the ins and outs of CFD trading, so always make sure you understand the risk you're taking.
- Setting a smaller position is the most straightforward way to mitigate your risk. You can determine the appropriate position size based on your account balance and risk tolerance. A commonly recommended rule is to risk no more than 1-2% of your total trading capital on any individual trade.
- Consider using Stop Loss Orders. A stop loss order is an instruction to your broker to automatically close your position if the price moves against you to a certain predetermined level. By setting a stop loss order, you limit the amount you can lose on a trade.
- Educate Yourself! Before using leverage, make sure you have a good understanding of the financial markets, the instruments you're trading, and the risks involved. Consider opening a demo account, if available to practice how trading with leverage affects you, and how you react mentally to different scenarios which is key to successful trading. Also keep a close eye on your leveraged positions, and the markets which can be volatile.
Looking for a CFD broker?
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