How to disable leverage

Forex trading has gained its popularity precisely because of leverage, which allows the use of brokerage funds when opening trades.

However, margin trading has both pros and cons: increasing the size of a position leads to a proportional increase in profits on successful trades or losses on unsuccessful ones.

High leverage is the main cause of large drawdowns or even the loss of deposits.

Therefore, many newbies ask this interesting question: "How can I disable leverage" and thereby reduce the risk of potential losses?

In other words, these investors want to trade exclusively with their own money, where the financial result is proportional to the deposit and is not increased by leverage.

For example, if your deposit is $1,000, leverage is 1:50, the trade volume, including leverage, is $50,000, and the exchange rate change against the trade is 1%. Therefore, 1% of $50,000 equals $500. Therefore, the loss in our case would be 50% of the deposit.

At that time, if the trade had been carried out only with one's own funds, then 1% would have been taken from a volume of $1,000, and the trader would have lost only $10. The difference is leverage size.

Trading solely with your own deposit will also reduce the potential profit you can make if a trade is successful. Therefore, the question "How do I disable leverage?" is more often asked by those who are afraid of losing their money rather than wanting to make a lot of money.

Disabling leverage

First of all, it should be said that when using leverage, you are not obligated to open orders with the maximum volume available to you.

This means that with a deposit of 10,000 euros and a leverage of 1:100 on your account, no one is forcing you to open a trade for 1 million euros.

You can also choose a smaller size in the trading platform:

Therefore, despite the available leverage of 1:100, you have the option to select a much smaller position size.

Furthermore, when registering with a broker , specifically when opening a new account, you can also choose the maximum leverage to be used in trading:

And if you choose 1:1, you won't be able to open a trade larger than your available funds, no matter how hard you try.

You should only choose this trading option if your funds are quite substantial, as the prices of currencies, stocks, or other assets rarely change by more than a few tenths of a percent in a day.

So, with the same €10,000 trade and a 0.1% daily exchange rate change, you'll earn €10, which is still a good scenario.

Read also: How Much Can You Earn on Forex ?