In Forex, your account balance can be deceiving. If you have only 100 dollars in your account, you can still trade the market for 1000 dollars. This is the advantage of Forex leverage. You can trade with a much larger amount of money than you have in your account. Account balance in Forex does not mean anything when you are in the market. If you see a good market movement and you want to take place in the market trade, you can take place for your 10 dollars also. However, if you look at the professional traders at Saxo then you will be surprised to see that all of them use the leverage in a very efficient way to trade the market.
Advantage of high leverage
Many traders do not know about this leverage in forex. It is the advantage which allows a trader to take on bigger risks for a bigger amount of money than they have in their account. In this world of Forex, you can only make money if you are skilled and experienced. Your balance will not help the other businesses. Most of the time, traders think they cannot trade the market as they have not got a big amount of money. It is your leverage that will make you trade the market for 10 dollars with 100-dollar profit winning chance. If you truly want to become a profitable trader in the CFD trading industry then make sure that you trade the live assets with an extreme level of discipline. A single mistake can blow your entire trading account in the market.
You can trade big on your small account
Forex market is volatile. Money is at risks in this market and traders most often open a small account. They open these accounts to check what will happen to their dollars if they open a large account for trading in the market. Because of the leverage, traders can easily trade the market for 1000 dollars if they have a small amount of 1000 dollars in their account. Leverage in the CFD trading industry depends on traders as they can choose their leverage during the opening of their trading account in the market. Most of the time, traders are given leverage and they do not use all of them. They only take a few risks in their account because they also know, they cannot make a profit in Forex market if they lose their money.
Perfect use of leverage
Leverage is there but it is only to attract the traders to make impossible trades in the market. This market is hungry for money and any wrong trade may cost you your capital. Do not open your account big. Trade in a small account with a good leverage. You will be making money in the market. Traders who do not think about their account balance and trade the market make the most profit in their trades. You need to use the leverage and the market with your small amount to make a good profit in the CFD trading industry.
Summary: Trading the financial instrument is an art and it requires pin perfect execution of the trading plan. If you are relatively new in forex trading then make sure that you trade the live assets with proper risk management factors. Always try to trade the higher time frame in the market since it will greatly reduce your risk exposure level in the market. And in order to use the tight stop loss make sure that you learn the art of price action trading strategy.