Knowing the link between leverage and equity is important. Now, you have to decide how much you are
willing to risk and set your trading capital accordingly.
To find effective leverage, consider two inputs: trade size and equity.
Use effective leverage of 10:1 or lower.
Only risk 10% or less of your account balance at any given time. Add the cash value of your entire exposure
to the market (all your trades), and never let that amount exceed 10 times your equity.
To calculate leverage of a single trade, divide your trade size by your account equity.
willing to risk and set your trading capital accordingly.
To find effective leverage, consider two inputs: trade size and equity.
Use effective leverage of 10:1 or lower.
Only risk 10% or less of your account balance at any given time. Add the cash value of your entire exposure
to the market (all your trades), and never let that amount exceed 10 times your equity.
To calculate leverage of a single trade, divide your trade size by your account equity.