(The method used by professionals)
The biggest mistake traders make:
Choosing leverage before understanding the trade.
📌 Professionals do the opposite:
They understand the trade first… then choose the appropriate leverage for it.
🧠 The first golden rule
Leverage is not a tool to increase profit
But a tool to manage capital wisely.
The more:
• Increased leverage → Closer to liquidation → Increased risk
🔍 What determines the appropriate leverage?
Before you choose ×2 or ×10 or ×20
Ask yourself these four questions 👇
1️⃣ Is the trade short or long?
• Quick trade (Scalp / Intraday) ✔️ Can have relatively higher leverage
• Longer trade (Swing) ❌ Low leverage only
📌 Time = Cost (Funding + Pressure)
2️⃣ Where is the stop loss?
• Close stop loss ✔️ Lower leverage
• Distant stop loss ❌ High leverage = liquidation
📌 Do not choose leverage without setting a Stop Loss.
3️⃣ How much loss can you tolerate?
Professionals do not risk more than:
1–2% of the capital in a single trade
📌 The leverage must serve this number
Not destroy it.
4️⃣ What is the market condition?
• Calm market ✔️ Medium leverage
• Volatile market / News ❌ High leverage = account suicide
🧮 Simple practical example (very important)
📌 Capital: 1000$
📌 Maximum acceptable loss: 2% = 20$
Scenario:
• You want a trade with a stop loss of 2%
• Choose leverage ×5
📊 Account:
• 2% movement × leverage 5 = 10% loss on the trade = 100$ ❌ (very risky)
Professional solution:
• Either:
◦ Reduce leverage to ×2
◦ Or reduce the trade size
•
📌 Target:
If the stop loss is hit
You only lose 20$… no more.
✅ How does a professional think?
✔️ Starts with acceptable risk
✔️ Defines the stop loss
✔️ Calculates the trade size
✔️ Then choose the appropriate leverage
✔️ Does not change leverage during the trade
📈 Leverage at the professional's level:
Adjustment tool
No gambling tool
⚠️ Most common dangerous mistake
• Using high leverage
• With an unclear trade
• Without a stop loss
• With the goal of 'recovering previous losses'
📌 This is not trading
📌 This is revenge against the market
🏁 The summary that changes your results:
Choose the trade first
Define your loss
Then let the leverage serve you… don't destroy yourself.
