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Leverage with Futures


#1

How much leverage can you take with a futures contract? More than the 3x leverage found in some of the ETFs? I understand how risky leverage is, but I just want to use it in the right way. I am not looking to make a quick buck, I want to organically grow my account for the next 15 years, but by using leverage I can use less of my money and take more positions, so that is why I am interested.


#2

Hello @Kyle50200 your approach is right, and long term is the way to think about trading. However, in trading there is “right way” because every trader may utilize leverage in a different manner that may work for him/her. However, beginner traders should avoid over leveraging in their accounts, because you first need to develop a method that works and can sustain large fluctuations of equity, and large draw-downs that occur to every long term trader. The amount of leverage uses is measured as a ratio of Margin to Equity. You want to keep this number as low as you can while you are a beginner or even as an experienced trader. As you grow your experience you may choose to use the same or higher leverage, however experience does not mean that you necessarily have to increase leverage. There is nothing wrong with being conservative in a high risk business.

Thanks,
Matt Z
Optimus Futures
www.optimusfutures.com


#3

How much leverage do you recommend for a beginner? And on average what is the actual mount of leverage futures traders use? Do they use 3x, 4x, 10x their capital? I am just trying to get an idea. Thanks.


#4

This is a technical forum, and we do not provide recommendations of the use of leverage.
However, we highly recommend to trade ONLY risk capital and be smart with the number of contracts.
I am closing the thread on this note.

Matt