In this article, I will share how professional traders choose leverage for a $50 account.
Adding debt to a $50 account is a good way to increase purchasing power to amplify profits.
Overleveraging is a common risk that many beginners face and I will explain my techniques for avoiding this problem.
After reading this guide, you should have a good understanding of how to choose margin level according to your trading experience and the market you trade.
- Professional traders consider that the optimal leverage for $50 is between 1:10 to 1:100.
- The way to trade a $50 trading account works by first signing up for a broker that offers the right amount of margin.
- The most important factors to be aware of are your own trading experience, market conditions, and your current trading strategy which will dictate how long you will stay in the market with an open position.
Table of content
- Leverage for a $50 account
- Is it possible to leverage $50?
- How to leverage a $50 account
- How do you choose ratio for $50?
- Tips when leveraging $50
- How margin affects a $50 account
- Where to leverage $50
- Strategies for leveraging $50
- Leverage and different account sizes
- Risk management with $50
- What to expect
- Mistakes to avoid
- Pros and cons
What is the best leverage for a $50 account?
The most optimal leverage for a $50 is between 1:10 to 1:100.
The reason why professional traders say different ratios depends on your level of experience, the market conditions, and how long you will stay in the market with your position.
For example, take a look at the table below and see how the time in the market changes the ratio.
As seen in the table, an optimal multiplier for a $50 account size depends on your leverage trading strategy.
Traders who stay longer in the market should choose a lower ratio since the overall risk is increased.
Traders with shorter time frames can afford to increase the debt due to the short holding periods.
Is it possible to leverage a $50 trading account?
It is possible to use credit for a $50 account size and many brokers for traders have micro-account options.
Micro-accounts allow you to make smaller deposits such as $50 and use that capital as margin requirement when trading.
When using a micro-account in currency trading, for example, you are allowed to trade a micro position
Micro positions are 1000 units of a standard currency and with a multiplier, you can afford this with a $50 account.
How to leverage a $50 account
The most efficient way to leverage a $50 trading account is to find a trusted broker and follow our step-by-step guide below.
- Select a reliable broker that offers micro-accounts.
- Sign up and verify your identity.
- Choose the payment method and deposit your $50.
- In this trading interface, select your ratio.
- Select the position size.
- Add your protective stop-loss.
- Open the position and monitor it.
By following these steps you will be able to securely boost $50 in any market.
While the position is open, make sure to opt for risk management strategies for leveraged trading to minimize losses.
How to choose leverage ratio for $50
Choosing margin for $50, according to professional traders, is a question of how long you stay in the market, your experience, and of course how volatile your asset is.
As a rule of thumb, the better your trading experience is the more credit you are allowed to add to your position.
Experienced traders have better control over risk and can handle big price swings easier.
Also, if your market is very volatile, you might want to lower the ratio until the market has returned to more normal levels of volatility.
Finally, as mentioned in the table above, the longer your holding time is the lower the ratio.
Short-term scalpers typically trade higher ratios because their holding times in the market are usually between a few seconds to a few minutes which decreases risk.
What to think about when you leverage a $50 trading account
Selecting the most optimal leverage for a 50 USD account is pretty straightforward, however, here are some tips to think about.
- When using $50 as margin requirement it is easy to get carried away and increase the debt to get more buying power. This is a mistake because even though you have a small account, it is still possible to grow it over time.
- Many traders that trade a small account size tend to skip out on risk management tools such as stop-losses. This is a mistake. You should treat your $50 account seriously, just as if it were $5000. This way you will be more focused and make fewer mistakes.
- Trading cost is another thing that beginners usually miss out on when they trade $50. Think about that trading fee increases are significantly amplified and will cost more than normal fees. If you are not careful this can eat up your account quickly.
These tips, which many professional traders use, will help you on your way while trading a small account size like $50.
How leverage affect profits and losses with $50
It is important to understand how leverage affects losses and profits in trading to get the right kind of expectations.
The simple answer is that it is your ratio that controls how much more you will lose or win.
For example, if you trade $50 with 100x debt, your position size will be $5000.
(50 x 100 = 5000)
Now, if you suffer a 0.50% loss with that position size, your total loss will be $25.
A loss of $25 would mean a loss of 50% for your total trading account.
However, with a 1:10 ratio, your loss of 0.50% would only be worth $2.50.
The margin you choose has the same effect on profits which means that a 0.50% profit of $5000 would mean a profit of $25.
Platforms to leverage trade $50
When it comes to choosing a platform, there are plenty of good options to choose from.
First, consider the market you want to choose:
- Spread betting
From here you can go ahead to choose some recommended brokers that let you margin-trade a $50 account size.
Below are some good options:
Remember, if you choose a currency broker, select the micro account at the start of the signup process.
In case you want to trade crypto, simply make your deposit of $50 and choose the ratio.
Good strategies for leveraging $50
Using $50 for leverage trading can be difficult since you lack the flexibility of a big trading account, however, some strategies are more suitable.
Below is a list of strategies when leveraging $50:
- Break-out trading: Using the break-out strategy means that you trade the market when it is about to break out from a prolonged trading range. Break-out setups are characterized by increased volume and a big price movement in one direction.
- Scalping: Scalp trading means that you take several trades and aim for quick profits. Scalp traders usually stay in the market for a few seconds up to a few minutes.
- Mean reversion: A mean reversion strategy is based on the notion that the market always returns back to the mean. This means that when the price breaks out from a trading range, it should always trade back to the mean price.
All of these strategies are good when you leverage a $50 account size.
Leverage with different account sizes
The account sizes are nearly identical and there is not much money on the table.
For example, it would be very different to choose margin for $650, or $1350.
When you trade a larger account it is no longer considered as a micro or mini-account.
This means that you have more of your own money in the market and you don’t need to use as much debt to trade a larger size.
However, when choosing debt level for a $50 account you still need to use borrowed capital to reach a larger position size.
Most professional traders that trade account sizes of up to $50,000 rarely use more than 1:5 or 1:10 multiplier.
This is because the risk of liquidation gets increased above 1:10.
How to manage leverage risk with $50
The risk of trading $50 with a multiplier is going to be the same.
The only thing that will lower your risk factor is by lowering the ratio.
The most common risk factor is the margin call, which means that your broker sends you a warning message telling you that you are running low on maintenance margin.
Should this happen you have three options:
- Close the position
- Add more funds
- Wait it out
Most professionals recommend closing the trade if you find yourself in this position.
A margin call means that something has gone wrong in the planning and it is better to cancel the trade.
The way to manage your leverage when trading with $50 is to make sure that you are not overleveraging.
It is also a good idea to start out on a demo trading account to get a feel for how the market behaves.
What to expect when leverage trading $50
When leveraging a $50 account size in any leveraged product, you can expect high volatility and increased trading fees.
I will share an example of a trade that I took when leveraging $50 to explain how your position will act in the market.
See the image below:
I traded the JPY/CHF trading pair and bought the JPY currency with 1:50 margin.
The market traded my way and I scored a profit of +0,22%.
This resulted in a profit of $5,50.
The calculation works like this:
$50 x 50 ´ = $2500 position size
2500 x 0.22% = $5,50 profit
This is what you can expect when leveraging a $50 trading account.
What mistakes to avoid
There are some beginner mistakes that you should try to avoid.
First of all, try not to overleverage.
Overlevering means that you choose a ratio that is much higher than the recommended.
For example, selecting a ratio of 1:200 is not recommended by professional traders and can result in a quick loss.
Secondly, avoid overtrading just for the fun of it.
Overtrading means that you take several trades per minute which results in up to a hundred trades in a single trading day.
This increases trading costs and severely affects your judgment.
Overtrading usually results in net losses since it is difficult to keep control during a long day of trading.
Pros and cons of leveraging $50
There are some key benefits and drawbacks when leveraging a $50 account, such as:
|Increased buying power
|It gives more flexibility
|Difficult to control
|It enables small traders
|Increased commission costs
These are what most professional traders agree on.
Professional traders recommend using a minimum of 1:10 to 1:100 margin with $50.
With a ratio of 100x debt and $50, your total buying power would be $5000.
Using 20x credit with $50 means a total buying power of USD1000.
Professional traders consider leverage for $50 to be between 1:10 to 1:100 for a $50 account. The optimal ratio depends on factors such as trading experience, market conditions, and the duration of holding positions.
However, it is important to approach trading with caution and consider several factors before selecting the appropriate ratio.
Leveraging a $50 trading account can be a good option for increasing purchasing power and potentially amplifying profits.
Traders with shorter time frames may opt for higher ratios, while those with longer holding periods may choose a lower credit to manage risk effectively.
To leverage a $50 account, it is crucial to find a reliable broker that offers micro-accounts. These accounts allow trading with smaller position sizes and can accommodate a $50 deposit.