As of 01/27/2023
  Indus: 33,978 +28.67 +0.1%  
  Trans: 14,483 +191.14 +1.3%  
  Utils: 968 +1.08 +0.1%  
  Nasdaq: 11,622 +109.30 +0.9%  
  S&P 500: 4,071 +10.13 +0.2%  
YTD
 +2.5%  
 +8.1%  
 +0.0%  
 +11.0%  
 +6.0%  
  Targets    Overview: 01/13/2023  
  Up arrow34,900 or 33,150 by 02/01/2023
  Up arrow15,100 or 13,500 by 02/01/2023
  Up arrow1,040 or 950 by 02/01/2023
  Up arrow12,400 or 11,000 by 02/15/2023
  Up arrow4,100 or 3,800 by 02/01/2023
As of 01/27/2023
  Indus: 33,978 +28.67 +0.1%  
  Trans: 14,483 +191.14 +1.3%  
  Utils: 968 +1.08 +0.1%  
  Nasdaq: 11,622 +109.30 +0.9%  
  S&P 500: 4,071 +10.13 +0.2%  
YTD
 +2.5%  
 +8.1%  
 +0.0%  
 +11.0%  
 +6.0%  
  Targets    Overview: 01/13/2023  
  Up arrow34,900 or 33,150 by 02/01/2023
  Up arrow15,100 or 13,500 by 02/01/2023
  Up arrow1,040 or 950 by 02/01/2023
  Up arrow12,400 or 11,000 by 02/15/2023
  Up arrow4,100 or 3,800 by 02/01/2023

Bulkowski on Forex Stats

Leverage in the Forex Market

How does the use of leverage affect profitability in the foreign exchange market?

This article is based on the writing of James Stanley in his article Three Rules to Risk Management as published in the July 2014 issue of Technical Analysis of Stocks & Commodities magazine.

When I read an author who supports his theories with statistics, I love it. Stanley did just that in his article. I'd like to share some of his findings with you.

The article is based on research conducted by FXCM.com. "FXCM is a registered Futures Commission Merchant and Retail Foreign Exchange Dealer with the Commodity Futures Trading Commission and is a member of the National Futures Association," according to their website.

The study included data from 2000 to 2010 on more than 12 million trades in the most heavily traded currency pairs. Here's what they found.

Table 1: Statistics
 Highest Equity  Average 
 Trade Size 
%
 Profitable 
 Leverage 
 $0 to $999 $26,00021%26 to 1
 $1,000 to $4,999 $30,00033%6 to 1
 $5,000 to $9,999 $54,00037%5 to 1

The above table shows how the use of leverage decreased as the size of the account grew. As leverage decreased, the percentage of profitable trades increased.

I wonder if this behavior trend continues for larger account sizes....

-- Thomas Bulkowski

Top of page

See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com If you buy ANYTHING while there, they pay for the referral.
Legal notices: "As an Amazon Associate I earn from qualifying purchases." Paid links).

My novels:  Remember Me book Bumper's Story book Head's Law book
My stock market books:  Chart Patterns: After the Buy Getting Started in Chart Patterns 2nd edition book Trading Basics book Fundamental Analysis and Position Trading book Swing and Day Trading book Encyclopedia of chart patterns book Encyclopedia of Chart Patterns 3rd Edition book Trading classic chart patterns book

Copyright © 2005-2023 by Thomas N. Bulkowski. All rights reserved.
Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.
Some pattern names are registered trademarks of their respective owners.
Home Advertise Contact Donate Links Privacy/Disclaimer

Everyone talks about apathy but no one does anything about it.Smiley