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Really? "Enough maths"?
In fact, I haven't claimed anything of MY own here, I've simply cited well-known pictures from explanatory articles on well-known investment websites.
The sites listed have a rank (i.e. are ranked in the world top 50 million sites) of about: 580 000 top sites, 1.6 top million, 8.0 mio respectively. Those are pretty high numbers. If you are not lazy, if you want to become a trader, and you speak English, you can go there and read more. The links are at the top. Corrected the link to the video.
You have made many of your own assertions in a short time in this thread. )
If the links you imposed help you in your personal trading and also sort out for yourself the leverage - nothing against it.
I don't need your links.
I tried to correct one of your first inaccuracies here:https://www.mql5.com/ru/forum/166224#comment_3985318
You didn't want to hear me.
Likewise you didn't want to see the logic in these statements of mine:
The margin is greater with less leverage. The point value is the same at different leverage sizes and depends on the lot size. Not the leverage.
If you're not an enemy of simple maths, you should realize that Uncle Kolya (warning about the need to deposit) and stop out (irreversible loss of funds) may come sooner with less leverage.
The dangers are in the lot sizes used, trading strategies and tactics (or lack of them), not respecting the MM.
Managing risk subtly and not so much is required regardless of the size of leverage.
Instead, they started telling you thatif youopen a position ". on your entire deposit at 1:1 leverage, your deposit will only fluctuate by 1-2% per day (normal market volatility). No "Uncle Kolya", i.e. no margin call there for a couple of months. ..."https://www.mql5.com/ru/forum/166224#comment_3985398
That is, not only are you trying to make me look retarded, but you think that everyone is an idiot who reads this.
From the questions "for a clue". Let's say on the EUR/NZD:
Sergiy Podolyak:
P./S.: You and I have in common - we agree that MM is important.
We diverge in the "sources of problems".
It's not the shoulder that's "to blame" and it's scary.
It is interesting that none of these theoreticians, professionals, forex professors have become millionaires.
They all teach everyone how to trade, but for some reason they themselves do not know how to do anything on the real market.
I trade on the basis of available funds in each account as if the leverage was 1:100. If it's 1:1000, it's invisible to me. I just do not care about the leverage, if it is 1:100 and more. What do the risks have to do with it, please explain? I lose as much as I lose, regardless of the leverage... I don't need the leverage over 1:100, I don't touch it.
How should I know how exactly you calculate the size of a position?
The maths here is straightforward: the higher the leverage, the more your equity (balance) decreases with a drawdown - for an equal position size. That is why it is "leverage": it increases the fluctuation of your equity when the price fluctuates. And the price is always fluctuating somewhere. Beginner traders do not want to see that, and they see only POSITIVE swings up their equity, and do not want to anticipate fluctuations of their equity (balance) DOWN, where they are cut off by the broker's margin call.
Instead they tell you thatif you open a position "... on your entire deposit with 1:1 leverage, your deposit will only fluctuate by 1-2% per day (normal market volatility). No "Uncle Kolya", i.e. no margin call there for a couple of months. ..."https://www.mql5.com/ru/forum/166224#comment_3985398
So, not only are you trying to make me look retarded, but you think that everyone is an idiot who reads this.
From the questions "for a clue". Let's say on the EUR/NZD pair:
So do the math. I don't work for you, thank God.
Trader even on all of his deposit will not be able to get to a margin call, if he trades with a leverage of 1:1.
You have 100K dollars and you buy 100K pounds with it on the spot forex market. You now have £100K in your account. The pound falls and rises by 10% per year, and then, with 1:1 leverage, your equity (and balance) - in dollars - cannot change by more than this 10%. What, where is the margin call?
Guys, this is 5th grade high school.
How should I know how exactly you calculate the size of the position?
The maths here is straightforward: the higher the leverage, the more your equity (balance) decreases with a drawdown - for an equal position size. This is why it is "leverage": it increases the fluctuation of your equity when the price fluctuates. And the price is always fluctuating somewhere. Beginner traders do not want to see it, they see only POSITIVE swings upwards in equity, and do not want to anticipate fluctuations of their equity (balance) DOWNwards, where the broker cuts it off on a margin call.
How the hell should I know how you calculate your position size?
The maths here is straightforward: the higher the leverage, the more your equity (balance) decreases with a drawdown - for an equal position size. That is why it is "leverage": it increases the fluctuation of your equity when the price fluctuates. And the price is always fluctuating somewhere. Beginner traders do not want to see it, they see only POSITIVE swings upwards in equity, and do not want to anticipate fluctuations of their equity (balance) DOWNwards, where the broker cuts it off on a margin call.
Shawshaw?
Equity and balance are two different things!
2. Leverage affects margin funds! If I have two accounts (both dollar accounts), one with 1:100 leverage, the other with 1:10 leverage. On the first account, to buy 1 lot (100000 base currency) of USDCHF I would need 1000$, on the second one I would need 10000$ of margin. Both will have the same rate of equity change.
If both accounts are initially at $20000 and take the worst case scenario, the margin call would come $9000 earlier on the second account than on the first. That's it.
Apparently, you are deluded. The statement highlighted in red gives away your delusion. The point is that the leverage does not affect the profit/loss in case of an equal position size (I assume it means volume). It only affects how quickly a Margin Call will occur. For the rest everything else will be absolutely equal.
Of course it can't - if we say "in dollars". The profit in dollars of the deposit does not change if the size of the position is equal.
What I mean is that it changes in PERCENTAGE to the deposit. The most dangerous events - stop-out and margin call are declared according to the percentage of your equity, not its size.
If the position size is equal, your equity will change differently (as a percentage value) as the price changes, depending on the leverage. It happens because the larger the leverage, the share of your deposit for opening one lot may be LESS, but no one makes a smaller position, and everyone is greedy - for greater profit.
That's the point of MM - to calculate the size of the position so that the RISK (i.e. drawdown) does not exceed a certain PERCENT of the deposit. It is a basic rule, which even in the USA is legislated for fund managers.
Leverage is an EXPENSIVE PERCENTAGE of your equity fluctuations depending on price fluctuations. This is the flip side of the effect of leverage. On the one hand it reduces the margin required for trading, and on the other it increases profits AND the percentage drawdown. Except that the drawdown, which with 1:100 leverage can be the same as growth (that is 20% and 100% per month), beginners forget due to their greed or ignorance, or arrogance.
It is a double-edged sword.
That is the point of MM - to calculate the size of the position so that the RISK (i.e. drawdown) does not exceed a certain PERCENTAGE of the deposit. This is a basic rule that even in the US is legislated for fund managers.
No.
What "no"?
I've already explained it here on the English forum and the man apologized for misunderstanding me there.
https://www.mql5.com/en/forum/63495/page6#comment_1888866
http://smallbusiness.chron.com/diversified-vs-nondiversified-investment-company-37629.html
"Diversified Vs. Non-Diversified Investment Company
by Chirantan Basu, Demand MediaInvestment companies invest in various securities, such as cash, bonds and stocks. Diversified investment companies, such as mutual funds, usually invest in several asset categories and in different securities within each category. Non-diversified investment companies usually invest in one specific asset category or industry, and in a few securities within each industry. Small business owners and other investors may use diversified and non-diversified investment strategies for capital appreciation, regular income or a combination.
........
According to the Investment Company Act of 1940, a diversified investment company cannot hold more than 5 per cent of its assets in a single security and not more than 10 per cent of the securities of a single issuer.
----------------------------------------------------------------------------------------------------------------------------------------
Diversification is a core of robust investing and accordingly medium- and long-term trading.
And it is now required by law not only for investment companies, but even for pension plans:
https://www.law.cornell.edu/cfr/text/26/1.401%28a%29%2835%29-1
"26 CFR 1.401(a)(35)-1 - Diversification requirements for certain defined contribution plans."
also:
http://www.icifactbook.org/fb_appa.html
"How investment company operations and features serve investors, examines the tax treatment of funds, and describes the core principles underlying investment company regulation."
etc.