The math behind it
Effective leverage is the number to watch. Two traders on the same 30:1 account can run 2:1 or 30:1 depending on how much they open.
An example with numbers
A $10,000 account at 30:1, EUR/USD at 1.0850.
The account offers 30:1, but even 1 lot means a 1% move in the pair moves the account almost 11%. Size from your stop and risk percentage first, then check the margin. If the margin is the thing stopping you, the trade was too big anyway.
Mistakes to avoid
- Thinking low leverage means low risk. A 1:1 account still loses 100% if you put it all on one trade with no stop.
- Watching the account's leverage instead of yours. Effective leverage is what moves your equity.
- Forgetting financing. Overnight swap and funding are charged on notional, not on margin.
What the journal does with it
On stock accounts you choose a leverage basis (cash 1:1, Reg T overnight 2:1, Reg T intraday 4:1, or custom) and the journal uses it to warn when a trade would exceed your buying power. For forex and CFDs, the position size calculator sizes from risk and stop, which keeps effective leverage a result of your plan rather than a setting.
See your own Leverage from real trades
Stop estimating it in a spreadsheet. Log or sync your trades and the journal keeps the number current after every close.
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