Trading is one of the most popular professions in this world right now. Given the recent health crisis, the world is going through, financial security has become a great concern. Thousands of people are losing jobs and many are searching for an alternative income source. As a result, currency trading is gradually emerging. However, not all investors have adequate capital to invest big amount. There are different CFD accounts depending on the deposit and all start with a mini lot. This is the smallest in terms of the deposit quantity.
Although there is no fixed rule on how much should be invested, brokers expect a standard fee of 10 dollars to start live trading. Due to the low balance, the concept of using leverage is on the rise. In this article, we are going to elaborate on whether this tool should be used. Keep in mind any investment is subject to market risks. Despite allowing the opportunity to invest like a professional, the risks increase exponentially. If not properly maintained, this can be the end of a career.
Before we begin, elementary knowledge is important. This is a tool that allows clients to invest a substantial amount without having one. If it is 1:50, one dollar deposit brings the power of placing an order equivalent of 50 dollars. Most brokers in the world allow leverage up to 1:1000 or more. If you are living in Australia, good news awaits. The Australian brokers offer up to 1:500 leverage. That is a huge amount and remember, the profit generated through trading is taxable by the Australian government. It is mainly used by small investors. Although the biggest fortunate would be the professionals, they tend to avoid at all costs. This we will explore further in this post.
Impact of the broker
Being a new CFD trader in Singapore, you have to be concern about the broker. Visit company website of Saxo and you will notice they are trying to educate the retail traders so that they don’t take high leverage. In fact, Saxo doesn’t provide insane leverage to any investors as they know it can be the main cause to blow up the account. On the contrary, have a look at the unreputed broker. They often give unlimited leverage which doesn’t make any sense. Unless you are 100% sure about the broker quality, you should never choose a CFD broker just because they offer the high leverage.
This is hidden a danger
Consider this idea to Pandora’s Box. It was forbidden to open but burning desire won at the end. This was thought to contain priceless treasures but only had harmful objects. Using this tool without proper knowledge can be suicidal. The traders only think of the big return but forget the risks involved. Imagine a person has used leverage correctly. The profit generated will inspire him to undertake more investments. What if a high-stake decision goes wrong? He will quickly lose hundreds of dollars depending on the leverage used. Consistent profit is the hardest battle in forex. When it comes to using a risky technique, this only piles up the hidden traps.
Any wrong movements can end a winning streak. They can surge up the money but so can take away the fortune. The experts are aware of this imminent risks and choose not to use. If professionals are beware of such things, regular traders dare not to think about it.
The opportunity is not worth the impending disaster
Before you have set mind, we request to practice in the demo session. It will give a first-hand experience of how this method can turn out. This industry is full of surprises and always moves against a favorable trend. When a substantial amount is at stake, know whether it is worth the perils. There are numerous ways to analyze the trend and make a consistent return, no need to replicate a dangerous technique.
