Using excessive leverage relative to account size and risk tolerance. Most experienced traders consider disciplined use of concepts like this to matter more to profitability over time than any single entry signal or strategy.
Using excessive leverage relative to account size and risk tolerance. Most experienced traders consider disciplined use of concepts like this to matter more to profitability over time than any single entry signal or strategy.
It's one of the most common causes of rapid, catastrophic account losses. New traders benefit from internalizing this early, since it underpins much of the terminology and reasoning used throughout the rest of their trading education.
Small adverse moves wiping out a large percentage of an overleveraged account. In practice, traders typically encounter this directly within their trading platform, charting software, or an economic calendar, depending on the specific context in which it arises.
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