How Professional Traders Use Leverage


We get a lot of emails every week on the topic of “ leverage “ with that being said we decided we would go into a little bit of detail on how you can use leverage and how professional traders do.

Retail traders starting off should learn more about leverage before they start using it.  They should instead be Progressing towards understanding it and incorporating it into their trading. The reason for this is that most retail traders are new to the game of trading. This doesn’t mean you should never use leverage it simply means that majority of new retail traders don’t understand how to use it properly. When used incorrectly it clouds their trading development and leads to losses and even blown up accounts. When these losses occur, its clouds people’s judgement and instead of being rational and objective about their analysis of the trade, they are more worried about the P&L.

When you’re trading from a position of scarcity or loss you’re never going to develop. This market doesn’t really care about our emotions or our expectations. This makes it very important to master the trade itself which includes mastering your emotions which many new traders have issues with.

Professional traders do use leverage a lot… They virtually live off leverage. When I was working on wall Street I had tons of connections with other firms. I have personally seen a lot of traders make absurd amounts of money particularly prop firms, hedge funds, etc. which is how higher returns are generated so don’t get me wrong leverage is a very crucial part of making significant returns on an investment and that is a fact.

Leverage generates significant returns in a short period of time. Leverage is perfect for taking advantage of obvious moves that are about to play out in the markets. The use of leverage is calculated and controlled which is the most important part of utilizing it. When George Sorrows made nearly a billion dollars on one trade over night he was highly highly highly leveraged.

There is nothing wrong with leverage, in fact, its a very important part of trading. Our institutional traders like to utilize high amounts of leverage in individual events that have an extremely high probability of occurring. Many of our traders in our CAP program, who trade our firm’s capital are encouraged to use leverage and use it on a daily basis in order to supercharge their returns without adding a dime of extra risk. So during an event where a particular trader sees’s his hypothesis playing out through technical and fundamentals he can take advantage of high amounts of leverage to earn a high rate of return. The higher the probability of the event playing out reduces the risk of the trade loosing. If you are just sitting behind a computer all day listening to CNBC or other pundits and utilizing high amounts of leveraging the odds of you losing money is very high.

The Confident Trader

Trading with leverage is much lower risk at times… So we position to a postion safely as a postion plays out in our favor. Some moves will play out in the session, but other moves will play out over days or week so with that being said leverage can be utilized in a different way.

There was a head line back in 2014 for example talking about the bank of japan injecting 80 trillion yen into its economy which took us all by surprise however the bank of japan increased QB Produce and this was a classic example of the price of a currency only going one way… If you look back on your charts you will see a dramatic increase of price and a very bullish trend.
Now this is why our training found in our Forex Mastery Course is so important but to put things into a nut shell its very profitable and important to find these unexpected opportunities and then apply controlled leverage. When you do get these type of events and you do understand the trade deeply enough this is where your going to double your account and show massive amounts of profit with little to no risk. When this occurred back in 2014 we knew that every trader apart of every trading desk was going to react to this information the same way we were. During this time we went very high on leverage because we knew how it would play out.

Now another prime example of this move was, As the trade played out in a favor we decided to add more leverage over time. This is not something I do personally because I know myself as a trader and how I react but this is a strategy that if utilized correctly you can use multiple positions to minimize your risk while maximizing your profits. I have personally seen traders make 10% – 30% utilizing this is just a few days or a week. You can literately double your return in the whole year with just one of these events. Similar events occur on the chart using technical analysis as well. When the higher time frame charts combine with the lower time frame chart and both give you a bias in the same direction, This creates a perfect match technical opportunity which we enter using the Patterns covered in our Professional trading strategies program.

5 Key Factors to Building a Strong Mindset for Trading (and Overall) Success

A Great example of this was with AMZN (Amazon) in March 2016 when the technicals on all timeframes combined with a pattern to suggest an explosive move higher. This prompted Anmol to make a long call on AMZN at $560 with a $1000 Target. He was called crazy for making this bold call and for using leverage on this position, but now in 2017 that target was hit resulting in extremely profitable trade even if you got out before $1000.

You must understand the trades in great detail. That’s when leverage is a gift. New traders will struggle to have the confidence to stay in a trade and let it play out over a few days or week when an event like this occurs but over time you will get to a point where your emotionally prepared for whatever the markets throw at you, this is when I would personally recommend utilizing high amounts of leverage.

Leverage when used correctly with proper risk and money management techniques is probably the best gift for traders.