What is leverage and is it dangerous?

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My broker is offering 1:500 leverage. Should I use it? What are the risks?

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✅Best Answer

Wolf Alpha

Trader · 15 days ago

Leverage amplifies both gains AND losses. 1:500 means a 0.2% move against you wipes your account. Beginners should use maximum 1:10.

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Wolf Alpha

Trader · 15 days ago

Think of leverage as a sharp knife. Useful in expert hands, dangerous for beginners. I use 1:20 even after years of trading.

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Wolf Cub

Trader · 15 days ago

Never use maximum leverage offered. Most professional traders use very low leverage — 1:5 to 1:20 is the range.

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