Read? Playing The Game of Leverage (10) - Counterparty Risk in Trading CFDs
Leverage is a double-edged sword. You can win big or lose big. Win big? Really?
Win Big if you get it right? Not necessay. But, Lose Big if you get it wrong is definite.
People seldom like to talk about their losses as it is loss of face to admit their losses and look silly too. People will like to boost about their big winning and for some winning small also talk big.
The truth is that when we are highly leverages, we are more likely to exit our winning positions sooner than expected so we are more likely to miss winning really big. Another thing is that market rarely gap up a lots but more often it will gap down a lots. When we are caught with such huge market gap down, the damage is already done and it is too late to regret.
In 2006/2007 Bull Run, on 28 Feb 2007, STI suddenly fell -4% on that day in reaction DOW overnight -3.3% plunge. I have lost $21,126 on that fateful day by closing out all positions. I have suffered the biggest one day losses since active trading and I think it will be so as I no longer believe the idea of Win big or Lose big by using leverages.
Read? Trading Performance Review
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