Common mistakes with leverage

Summary

The same mistakes appear again and again: using high leverage with no stop-loss, adding to a losing position to lower the average, ignoring funding on positions held for days, and trading right before big news. Traders who use futures for years usually keep leverage low, decide the stop before entering, and accept small losses quickly. Nothing here is advice; it is a list of what to watch out for.

Key points

• High leverage with no stop is the classic way to be liquidated.
• Adding to losers can turn a small loss into a total one.
• Low leverage and a planned stop are the usual habits of experienced traders.

Check yourself

Which habit is common among traders who use futures for years?

Practice