Right across the globe, there were several media reports about people who lost a lot of money while trading using leverage during the EURCHF market move in January.  This significant move occurred after the 1.20CHF floor was removed by the SNB in January.

This has led to a lot of people questioning the inherent dangers associated with leveraged trading.

It needs to be immediately acknowledged that leveraged trading has always more risk inherent when compared with unleveraged trading.  This makes total sense because, with leverage, you have exposure to a much larger trade size than you would have without leverage.  There is also a very clear relationship between the risk involved in a trade and its potential return.

But does this mean you cannot trade profitable using leverage, and that you are likely to lose all your trading capital?

If you don’t know what you are doing, it is indeed quite likely.  On the other hand, if you actually do know what you are doing, then it is unlikely.  This is where a valid, professional education comes in.

So let’s analyse the EURCHF with a very simple checklist from our own perspective.

Would we put an unreasonable percentage of our trading capital in one instrument alone?  No

Would we additionally use excessive leverage therefore trade with and excessively larger trade size than our own deposit in this one market?  No

Would we ignore the fact that this wasn’t a natural market… this was a market where a third party is intervening for the past 3 ½ years?  No

As a result of the above assessment, did we lose money within the EURCHF movement?  No

Our very risk-orientated approach to leveraged trading is unlikely to make us rich just over night, but it will increase our probabilities to trade consistently successfully.  The first step is to ensure that we do not to lose all of our initial trading capital.

We at the Academy of Financial Trading are more than willing to teach every single individual, who wants to generate a second income through their own effort, using our proven strategies.  We will show you how you can manage your risk effectively while trading using leverage.  We teach you to neither be greedy nor unreasonable.  Jackpots just exist in casinos!