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Re: XAO Banter Thread

Leverage is a tool which is unwise for anyone without a proven profitable system, either fundamental or technical, to be using in my opinion.

It's a bit like speed in a car. It amplifies the effects of what you do be that profitable or unprofitable. However much you'd profit or lose on a trade, adding leverage increases that relative to your capital base. Great if you're profitable but potentially a disaster if you're not.

You wouldn't put someone behind the wheel of a car for the first time and have them driving at 200 km/h. Well, hopefully you wouldn't as it's a recipe for disaster if (when) they make a mistake. No, you teach them to drive at far slower speeds starting on quiet streets and build up from there.

Same concept with investing and trading. Start small, no leverage, and always remember that the market WILL be there tomorrow. It's better to miss out on a few profits than to wipe yourself out with huge losses and put yourself out of the game. Just like it's better to learn to drive at 40 km/h and cause no real harm rather than learning to drive on a race track and ending up dead. Same with anything, start small and build up from there.

Just my opinion based on personal experience.