9/21 It’s actually not necessary to have such high leverage.

FX Automated Trading, the EA developerReiwa’s Double-E is.

Today we’ll talk about leverage.

Everyone,do you think higher leverage is better?

What actually happens?

From the perspective of a professional EA developer, I’ll explain!

Or rather,

as the title suggests, haha

That’s right,

in fact, you don’t need such high leverage!

Until now, you’ve perhaps thought

that higher leverage means you need less margin

and you can place larger lots, thus you’ll earn more!

…you’ve thought so, but you’ve likely encountered stop-outs anyway,

haven’t you?

However,

don’t worry, it’s okay!

In EA operation, in reality

you don’t actually need that high leverage!

If you don’t need high leverage, you can operate stably.

And yet, you can expect higher income than with high leverage.

There actually was such a mechanism!

Today, I’ll talk about that!

In domestic FX accounts, leverage is 25x.

For corporate accounts, it exceeds 50x.

That difference is indeed double.

What you might be thinking here is...

“If leverage doubles, I can double the lots as well!”

Would you really think that!?

That is a big mistake!

Because,

“Even if leverage doubles,”

“the maximum drawdown does not halve!”

If leverage doubles,

the required margin simply halves.

However!

the amount of maximum drawdown does not halve!

If you don’t know this,

even though you’re operating well, you’ll go bankrupt soon!

So,

I’ll actually present past backtest examples and explain.

Now, as a premise,

USD/JPY = 150 yen

Lot = 0.1 lots

Maximum drawdown = 40,000 yen (400 pips)

Leverage = 25x

In this case,

calculation of required margin is…

150 yen × 0.1 lot (10,000 base) ÷ leverage 25x

This can be calculated, and the amount becomes 60,000 yen.

Since the maximum drawdown is 40,000 yen at this time,

adding these two gives 100,000 yen.

This is the minimum starting capital required.

Now then,

What happens if leverage is 50x?

Required margin halves to 30,000 yen.

Add the maximum drawdown of 40,000 yen, you get 70,000 yen.

With 50x leverage, it would be 70,000 yen.

Even though leverage doubled, it’s only down from 100,000 to 70,000.

It will never be just 50,000 yen.

This is the big pitfall!

Whether you know this or not will greatly change your future operation.

Everyone,

If you’re using EA, of course you want to earn big.

That feeling is truly understandable.

But,

when aiming for big profits,

you’re also risking big losses and potential ruin, right?

Moreover,

when you actually run these calculations,

high leverage doesn’t help much!

Rather,

safely operating with leverage like 25x reduces the chances of ruin in the future,

and your assets may grow over time, perhaps.

I hope this is helpful!

Thank you!

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【Reiwa’s Double-E EA Listing】

https://www.gogojungle.co.jp/users/112481/products

Specifically, categorized Reiwa’s Double-E EA by genre

https://www.gogojungle.co.jp/finance/navi/articles/67162

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