What does trading with 1:3000 leverage look like in practice?
In recent years, the maximum leverage offered by stock brokers has increased by tens, if not hundreds, of times.
Just 10-15 years ago, you had to try hard to find a broker that allowed you to use leverage greater than 1:100, but now most companies provide leverage of 1:1000, 1:2000, or even 1:3000.
Looking at these figures, it might seem that you don't need your own money to trade Forex anymore. All you need is $10 and 1:3000 leverage to open trades worth $30,000 or 0.3 lots.
But what does trading with such enormous leverage actually look like, and how realistic is it to make any money with such a ratio of equity to borrowed funds?
This leverage is available on professional accounts such as ecn.mt4, pro.ecn.mt4 and ecn.mt5, with the minimum deposit for an ecn.mt4 account being $300, and for pro.ecn.mt4 and ecn.mt5 accounts it is $500.
Unfortunately, you won't be able to test the 1:3000 leverage here, as the maximum leverage for demo accounts is limited to 1:500.
But even without opening a real account, you can calculate the basic parameters taking into account a deposit of $300 and a transaction of 8 lots on the euro/dollar.
Immediately after opening a trade for 8 lots, the order shows a loss of -$80, meaning the spread for 8 lots was almost 30% of the $300 deposit:
Literally three seconds later, the loss exceeded $170, and the deal was “successfully” closed by force by the broker.
This isn't surprising, as the value of 1 pip in this trade is $8 for a five-digit quote. And in a fast trend, the price can move a couple dozen pips in just a second, and not always in the desired direction.
In other words, trading with 1:3000 leverage is more like roulette than conscious trading. And a $300 deposit is lost in just a few seconds.
Therefore, any analysis or use of indicators is out of the question in this case. Frankly, I don't even understand the need for such a huge leverage. It's also worth noting that opening trades on some currency pairs is completely impossible, as the spread would exceed the trader's deposit.
This is most likely just a marketing ploy to attract clients, as it's completely impossible to use such a tool in real life. Even for scalping, it's advisable to limit yourself to 1:500 leverage.
But this is just my personal opinion; nothing prevents you from opening an account and experimenting at your own risk.
Use leverage of 1:3000 - www.alpari.com
