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Why Is Lower Leverage Important?

April 26, 2017leverage lower

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Why Is Lower Leverage Important?

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The combination of high leverage and volatile currencies can be extremely dangerous. Accounts that trade the most volatile pairs, such as GBP/USD and GBP/JPY, with the maximum amount of leverage tend to have less positive performance. On the other hand, traders that focus on less volatile currencies, such as USD/JPY and AUD/USD, and use more conservative leverage may do better. When trading volatile currencies with high leverage, one bad trade can wipe out the profits from many good trades. By trading with less leverage, a trader can lower their risk of a big drawdown from one bad trade.