How to Change the Leverage on MT4
Published October 5, 2021.
Leveraged trading has become immensely popular amid the wave of new investors over the last two years. The investment strategy also referred to as margin trading, lets the trader borrow funds to initiate a larger position than his or her own capital.
Put simply, it is essentially a loan to invest greater sums on stocks, forex, and commodities.
This tactic allows the investor to potentially increase returns with a higher leverage ratio. Unfortunately, the wrong move can also trigger steep losses.
If you are using the MT4 trading platform, how do you modify leverage anyway? We have compiled a brief step-by-step breakdown to help you get started with MetaTrader4 leverage.
How Does MT4 Determine Leverage?
On the MT4 trading platform, leverage is determined differently from share dealing. The formula for financial leverage works as total company debt divided by shareholder's equity, which is also identified as the debt-to-equity ratio.
Now, how does the leverage work for retail and institutional investors?
If there is a 100:1 leverage, this means that for every $1 in account equity, the investor can control up to $100. Or, if the leverage ratio is 500:1, this means investors can work with up to $500 for every buck.
How to Alter Leverage Settings on MT4
Whether you want to increase or decrease leverage on MT4, it is simple enough to do with a few clicks.
- Start by visiting the "Accounts" section of your "Secure Area" profile.
- hit "Select" next to the MT4 account number
- Choose "Change Leverage."
The maximum leverage ratio might depend on the securities being traded. Some may utilize a fixed leverage system based on the position traders established on the MT4 trading platform.
Conclusion: What Leverage Should You Use for MT4?
When first-time investors are experimenting with leverage, they should always start with the smallest amount available. Since leverage is enormously risky for all traders, you do not want to potentially ruin your finances by making the wrong trade with a 250:1 leverage ratio.
Or, if you want to work with greater leverage, you can always participate in demo trading and ensure you know how the process works.
In the end, as every finance expert recommends, only invest what you can afford to lose.