This article is for educational purposes only. Trading with leverage, margin, futures, or derivatives carries a high risk of rapid or total loss. This is not financial advice and should not be used to make trading decisions.
Leverage Trading Strategies: 18 Risk-First Setups
This tutorial on the top 18 leverage trading strategies is going to be an article for those of you who already know how to trade with leverage and want to improve your results by learning new skills.
Let’s face it, traders use leverage to change the size and speed of their P&L. It can grow winners faster, but it will accelerate losses just as quickly if you are wrong.
There is nothing wrong with using leverage in a controlled way if you already understand your edge. Add size slowly, test it in small clips, and remember that every extra turn of leverage also raises the damage a single mistake can do.
Sometimes it can be difficult to find an angle of how to approach the market and how to find good trades.
Everyone gets stuck. You stare at charts, nothing clicks, and every trade feels flat. The goal of these ideas is not to promise “big cash”, it is to help you read the tape better and lose less while you look for clean opportunities.
Leverage trading strategies explained
A trading strategy in a leveraged market is an idea and a way of executing your trades in a matter where you tilt the probabilities in your favor.
It is one of the most important parts of staying alive as a leveraged trader. Without a process you trust, you stay in the “random trade” pit for years. If you are serious about this, you need a rule set that keeps you in the game first, then lets your edge show up over time.
Most retail traders think that a strategy is built up of difficult mathematical assumptions and hard-to-grasp indicators that only a math Ph.D. can understand.
That is completely wrong and I will explain to you why.
Strategies are not only about how and where to enter your chosen market, strategies in leveraged trading are about your approach in general.
Markets behave in different ways and the only way to truly understand the currency pair you are actively trading is by following it for a long time and developing principles that later become your strategies.
A strategy is nothing more than a set of rules and your favorite ways to trade a market that you have familiarized yourself with over several weeks or months.
The best traders I know only trade one market and they do it well.
This should give you some perspective. One well-understood market and one clear strategy can be enough to build a track record. The same setup that gives you a strong run of winners can also hand you a brutal drawdown if you disrespect risk.
Why strategies are important
Leverage strategies help you focus on specific types of opportunities instead of clicking at random. They do not guarantee profit. They just tilt the odds a bit when you combine them with discipline and strict loss limits.
Without a strategy, you are shooting in the dark, and you are going to miss.
I remember clearly when I first started to understand how important it was to have a solid view of how to approach trading. I completely changed my mindset and I started to make better results.
I didn’t go from zero to hero, but for sure, my results went from negative to positive at the end of the month.
The reason I was able to turn my trades around was because of how I looked at the playing field.
Instead of acting ruthlessly at every opportunity, throwing my money into the markets without assessing the situation properly, I became an analyst who scouted the right opportunity.
My trading strategies led me to only take the best setups after I had checked every point on my list, and then I pulled the trigger.
1. Momentum trading
Momentum is one of the most crucial aspects of using leverage to your advantage.
Some of my best trades have been with either positive or negative momentum where the market kept going in the same direction for a few hours up to a few days.
The reason why momentum is so good is because once you get on the right side of the trade you will never have to look back.
Sometimes the trade goes green straight away. In those cases you can slide your stop toward break-even and let the position breathe. It still is not “smooth sailing”. One headline or one liquidation cluster can flip it against you in seconds.
If you are used to taking trades in a choppy market that feels “safer” you have probably been stopped out on countless occasions thinking “What is wrong with my trading?”.
This is because you didn’t trade the momentum.
When you catch clean momentum you see what leverage can do to a position. The swings get larger, both ways. If you manage risk well on the right side of that move, your P&L can jump. If you chase late, the same leverage will just magnify the loss.
The best way to find momentum is to learn to trade breakouts.
Breakouts either up or down provide the best momentum in any market because it is followed by a series of stop-losses getting triggered and a bunch of hungry traders jumping on the train.
No one knows how long a momentum leg will last. Your job is to define your entry, your risk, and your take-profit levels, then stick to them. Sometimes you will catch a clean extension. Other times it will snap back and stop you out.
A strong momentum run can make a month look very good on paper. It can also give you a false sense of safety. Do not build your life around the idea that “a few trades will pay the month”. Think in years, not in single streaks.
2. Short-sell support levels
This strategy goes hand in hand with the previous point.
Short-selling support lines can create massive momentum because it creates a huge shift in the sentiment of the market.
Many traders rely upon and trust support lines but once they break, they break hard.
The bigger the support level the bigger the move.
Since leverage is all about getting on the right side of the trade as soon as possible and maximizing the potential of the buying power, broken support levels make for some of the best opportunities.
The reason why they are so effective comes down to the shift in sentiment.
Image the number of traders that were heavily long above or at the support line.
All of them fear that the prices will fall below their feet stopping them out.
So, when it happens there is a domino effect of triggered stop-loss orders that become market sell orders and the push-down continues.
It might take a few attempts before you time a clean break. With tight stops and patience, one of those trades can pay for the scratches. Just remember that every attempt still carries real risk, so size accordingly.
Now, start looking for a “trusted” support level and wait for it to break.
If it doesn’t break, no problem, there will always be another support level.
Related: How does short selling with leverage work?
3. Learn one market at a time
This leverage trading strategy is very effective.
When I first started out more than a decade ago I was stuck jumping from market to market looking for opportunities and sadly enough, profits.
This didn’t work and it will probably not work for you either.
The reason why jumping between different currency pairs or stocks doesn’t work is that you don’t learn the behavior of either one.
The better choice is to stick to one forex pair and learn how it moves and how it behaves.
Once you have a good understanding of the most important behavior you can start to pull out the best setups and opportunities.
Now, after you have found the best setups according to your analysis it’s time to go to work.
By only entering the market in the setups you have written down you increase the probability of success by miles.
This is because you understand why you are entering and you have a higher chance of predicting the market.
Do this consistently and track your trades. Over a long sample you will start to see which setups actually carry your P&L. The feedback is slow and sometimes painful, but that is the only honest way to refine a strategy.
4. The 1% rule
If you haven’t heard of the 1% rule I am sure you have lost a lot of unnecessary capital.
The 1% rule says that you should only lose 1% of your total risk capital in any given trade.
For example, if you have a total account size of $1000, your 1% loss would be $10.
If you enter the market with $200, $500, or even the whole $1000, your 1% loss will remain the same.
Why is this so effective and why do so many traders use it?
The reason why it is so effective is that if you only lose 1% of your entire stake on any given trade, you will survive many losses before you run out of capital.
Think about it. If you used a different rule that allowed you to lose 20% on each trade, you would lose all your capital if you made a series of 5 losses in a row.
Is it possible to lose more than you invest with leverage?
Yes, it is, but with the 1% rule, you can withstand 100 losses in a row before you go broke.
The interesting part with leverage is that you can change the position size of the position while keeping the same percentage risk on the account. That only holds if you respect your stop. If you move or remove the stop, the math breaks and the 1% becomes a story you tell yourself.
If you keep each loss small, a single strong winner can cover a cluster of small losers. There is no guarantee that this happens on schedule. You can go through long stretches of grind before you see that pay-off.
This is how profitable traders stay in the game while testing their setups
Adopt this strategy and you will see how your losses change completely.
This also improves your at the end of the month results by reducing your overall loss profile.
In my opinion, it is one of the top risk management techniques.
5. Use smart stop-losses
A smart stop-loss is a thought-out stop-loss that is not at any risk of getting hunted by algorithms and random market swings.
Let me explain further what I mean.
You should always choose your stop-loss according to the volatility.
If you are experiencing high volatility then you have to use a wide stop and when the volatility shrinks you are allowed to tighten your stop loss.
This is something that not many traders appreciate and they keep the same distance to their stop loss at all times.
Using the same stop distance in every volatility regime is a slow leak. The market does not care about your fixed pip number. Match your lot size and stop distance to current volatility so that a normal swing does not wipe you out.
If you randomly choose an arbitrage number for your stop loss, let’s say 50 pips or 0.75% you are going to end up getting eaten by the volatility on days when the swings are bigger than average.
You will only be safe on days that the volatility is low and on some days you might even use a protective stop that is too wide and you are not maximizing your potential.
Use an indicator such as Average True Range (ATR) to calculate the daily volatility and then set your stop-loss accordingly.
This protects more of your capital. It also lets you stay in trades long enough for your edge, if you have one, to actually show up.
6. Breakouts pays the bills
Breakouts are one of the cleaner structures to trade with leverage. Price is already moving. You see where the range failed. They are not guaranteed profits, but they can be easier to manage than random chops if you understand the pattern.
When talking about momentum trades, breakouts are at the top of the hierarchy and if you master this strategy you will not have to do anything else as a trader.
raders like breakouts because the structure gives you a tight invalidation level and, sometimes, a decent distance to the next obvious area. The risk and potential reward are easy to see on the chart.
Try our risk to reward calculator to see if your setup has a risk reward ratio of at least 2.
If you enter close to the break level and your stop is tight, the distance between your risk and your first target can be large. On paper the ratio looks great. In reality, slippage, fake moves, and partial fills will grind that down.
It can be tempting to size up aggressively when the numbers on the screen look perfect. Resist that. Keep your size inside your pre-defined risk cap, even when the setup looks like a gift.
Even with clean structure you never have “no risk”. Breakouts can and do fail. Your job is to define a small, fixed loss you can live with, not to convince yourself that the market owes you a one-sided trade.
Many experienced traders build a large part of their P&L from a handful of well-timed moves in trending markets. They still take lots of small losses along the way to find those legs.
Even strong breaks can snap back and take your stop before continuing. There is no such thing as a “sure breakout”. Treat every trade as a probability, not a promise.
This would be a fakeout, something that frequently occurs in the marketplace.
A fakeout is a breakout that quickly turns back into the range only to lure traders to take the bait.
It takes time to learn how to spot a true breakout but I can give you some helpful tips.
A true breakout takes time to develop, the longer the market has been in a range the better it is.
The volatility always shrinks before a real break and it’s almost as if the trading activity disappears.
It’s called the calm before the storm.
When you trade a breakout, keep your stop where the idea clearly fails and size the position from that level back to your 1% risk. Do not “load up” just because it looks clean. Respect your max risk per idea.
I have traded structures with very tight stops and high effective leverage. Those trades require precise execution and zero room for hesitation. They are not suitable for most traders and they amplify every mistake.
Those trades can make a big difference to a month or even a year if handled well. The same style can also blow up an account if you treat it like a shortcut.
7. Avoid news and stick to your setups
News stories never tell you anything that you don’t already know by looking at a chart.
If you read about it in the news or hear it on the TV, it’s already over and there is nothing you can do about it.
You missed the train.
I have never heard any trader say the following: “I heard on the news that there was an upcoming breakout in Tesla so I bought some and made $2000”.
What you hear is more like: “Tesla surged 15% into new all-time highs this afternoon after Elon Musk acquired company X for their next moon landing”.
In that case, it is already over and the only ones who made money on that trade were the investors who bought Tesla the last year.
So, what should you do instead?
Ignore the news and focus on your own setups.
It is your setups that are going to give you an edge simply because they are studies of the behavior that you have analyzed and written down.
Your setups will be valid in a live scenario and you will always be the first one to enter if you follow a good strategy.
Your own setups also speak to you more than any other story might and they give you the correct information that you need to hear.
Your next step is to start writing down your setups and follow the religiously.
8. Learn the 80/20 rule
As mentioned in the introduction, this strategy is more of a mindset but it carries a lot of wisdom for any trader.
The 80/20 rule basically says that as a trader, you are going to make 80% of your money on 20% of your trades.
Think about that for a second and let it sink in.
20% of your trades will generate 80% of your profits, how is that even possible?
It is very much possible and I will explain how it works.
Trading is very random and so are the results you make on any given month.
It is not a steady nine-to-five work where you get the same paycheck every month.
The 80/20 idea is simple. A small slice of your trades will likely drive most of your returns. Your job is to recognize when the market is clearly leaning your way and hold size that is still inside your risk rules.
When you see a very clean A-setup, you can lean into it more than your average trade. That does not mean doubling your risk or breaking your plan. It just means you use the upper end of your allowed size.
When this trade succeeds you will make more money on that single trade than you have made on the previous 10 winners.
That’s what a sequence of trades looks like for a pro.
Your trading result should look something like this:
- small win
- small loss
- win
- medium win
- small loss
- small win
- small loss
- win
- small loss
- Small win
Those are 10 trades where two of them are actual wins.
When you look at it from above it is clear that no other trade matters, except for the huge wins.
Those are the trades you wait for and execute with full focus. You still trade them inside the same risk framework that keeps you from blowing up on the next ten ideas.
9. Write down your setups
The last general strategy is to write down your setups on a piece of paper or on your computer.
The reason why this is so effective is that you internalize the setup and you remember the build-up for the next time it occurs in the market.
If you have a notebook of 3-6 solid setups where you describe how the market behaved before you entered you will be much more effective in scouting that setup.
As you write them down you will passively view the market with your setups in the back of your mind.
As soon as you find one of your written-down setups you are ready to enter and you know exactly what to do.
The better you are at writing down the sequence from before to end the better you will be at discovering it in a live scenario.
Remember to go back to your notebook and make adjustments if you find ways to improve and also to keep things fresh in your head.
Mike Bellafiore wrote a book on the topic of creating a Playbook where you write down all your best setups to improve as a trader.
I recommend that you read the book if you feel that this could improve your results as a day trader.
High Leverage Trading Strategies and Risk Control
These strategies are different from standard spot approaches. In this guide I break down key points to think about when you work with high effective leverage and tight risk limits.
This tutorial is aimed at traders who already understand spot trading and basic risk management. If you are still new to markets, high leverage in crypto, forex, or stocks is not a good place to start.
When you use borrowed funds, especially at very high effective leverage, you have to think about both sides of the trade. The goal is to cap the damage a single position can do to your account and let the upside take care of itself over a lot of trades.
As you will see, some of these strategies are directly focused on the entry, your stop-loss level, and the amount of margin capital you put in as your initial investment.
How it actually works
At some point most traders see the “50x / 100x” buttons and wonder what that actually means in practice. High leverage is simply taking on a much larger notional position than your cash balance would normally allow.
In practice it lets you speculate in forex, crypto, or stocks with a much larger notional position, sometimes 50x or 100x your own capital. That also means price moves that look small on the chart can translate into large swings in your P&L.
Many under-capitalized traders reach for high ratios to “fix” a small account. That usually ends in fast losses, not in professional-style results.
It is true that making a full-time income from a tiny account is unrealistic. Leverage does not solve that problem. It only accelerates how quickly you discover your weaknesses.
That’s why many people try to size their trades like professionals before they have professional process. The position may look impressive, but without skill and discipline it just exposes you to professional-level drawdowns.
Without planning, testing, and screen time, high leverage simply magnifies every mistake. No position size will fix the lack of a real edge.
9 high leverage trading strategies
A good strategy needs to be added slowly. You test it in small size, track the results, and avoid chasing big profits while you still don’t know how it behaves.
If you are still early in your learning, these ideas belong on a demo or in tiny live size first. High leverage on a fresh account is one of the fastest ways to blow up.
Keep your trading balanced. Risk management comes first, then execution. In most markets it’s still true: good defense keeps you in the game long enough for the right trades to show up.
1. Focus on trending markets
The first strategy I want to talk about is how you pick your market.
When your effective leverage is high, you want the market to be clearly one-sided. Strong trends make it easier to define your risk and avoid death by random chops.
Why is this you may ask? Can’t I trade whichever market environment I want and use my standard setups?
Yes, you can. However, when using high credit in forex, crypto, or stock trading, you are always better off entering a heavily one-sided market.
Here is why.
A one-sided tape tends to respect levels better, throws fewer fake breaks, and often shows you quickly whether you are wrong. It does not guarantee profit, but it gives you cleaner feedback at the entry.
The last part of that sentence is the most important for a trader, the entry.
When you enter your currency pair or your leveraged altcoin pair, you need to focus on your entry above all else.
With high leverage your liquidation price level sits close to price. You don’t have the luxury of firing ten random entries. A few bad clicks can wipe a chunk of your margin.
A common pattern is traders camping in ranges because they “feel safer”, then getting chopped to pieces by small swings. In high leverage that behavior is even more expensive.
Take a look at the screenshot of a trending day in the BTCUSD pair:
All of these arrows are spots where price moved in your favor quickly after entry on that specific day. That won’t happen every time, but it shows the kind of structure you want to hunt for.
They are all short-term trades but the important factor here is that you can raise your stop-loss to breakeven immediately.
When you are trading on margin, scan for days where the market is clearly trending and liquidity is decent. Enter according to your plan and let the stop do its job if you’re wrong.
The best way to fix this is to practice by looking for a trending forex pair, stock, or cryptocurrency and aim to enter with the trend.
Further down in this guide, I will describe range-bound days as an example of when not to enter.
2. Pick a low-spread broker
One simple edge is just paying less friction. With leverage, fees and spreads scale with your notional size, so broker costs matter a lot.
You don’t need this to “make a living”. You need it to avoid throwing away a big part of your edge in pure transaction cost.
Ok, when you enter and exit the market several times per day as an active day trader you are going to pay the entry fee when you open and close your position.
Also, the spread fee is going to be proportional to your position size, and since you are trading on margin, your position size increases.
This will cause you to pay increased fees daily.
It makes a difference whether you are paying 0.05% commissions or 0.15%.
Let’s take the example of a trader who deposits $1000 in his account as collateral and uses 100x more capital to trade.
He is now able to open a position worth $100.000, let’s calculate how much he needs to pay in fees each time he opens or closes this position with a 0.05% and a 0.15% commission rate.
$100.000 x 0.0005% = $50
$100.000 x 0.0015% = $150
So, with the fee of 0.05% the trader pays $50 each time he opens and closes the $100.000 lot, and with the 0.15%, he pays $150.
That is a huge difference considering that the account size is only $1000.
In this simple example, a higher fee structure means the account bleeds out much faster if you hit a string of losing trades. Cheaper trading costs give you more room to be wrong while you refine your strategy.
Three, six, even ten losers in a row can happen. Good setups reduce the odds of long losing streaks, but they never remove them. Your sizing has to assume that streaks are possible.
3. Enter fast and exit fast
If you struggle to keep gains when trading with leverage, your holding period might not match the product. Many leveraged products are built for short-term trading, not long swings.
Leverage turns trading into a fast game. That doesn’t mean every position must be closed in minutes, but the more leverage you add, the less room you have for sitting through noise.
Most high-leverage products are designed around short time frames. Your strategy has to reflect that. Swinging them for days while paying funding and holding gap risk is a different type of bet.
But why is this?
Why can’t we hold a leveraged position longer than a few minutes, hours, or even a day?
The first reason why you don’t want to hold a margin position overnight is due to the management fee.
The management fee is an interest payment that you pay for using borrowed money.
In the same way that you would pay a car loan or a mortgage on your house, the bank wants its money.
If we close all positions before the end of the day, we get rid of this fee completely which can be pretty big depending on your ratio of borrowed funds.
Secondly, a leveraged position swings in and out of profit very rapidly and you can get knocked out in a matter of seconds.
That is why whenever you are in a profitable position, raise your stop-loss to breakeven as soon as you can and they keep raising it as the market goes higher.
If the market gaps strongly in your favor right after entry, it is often better to take the win or at least scale out. Big early moves are rare. Don’t assume they will always continue.
With high position size, even a small move can translate into a large dollar change in a short time, especially in crypto. That cuts both ways. The same move against you can erase weeks of progress.
As a simple math example: a 5 percent move on a 250,000 notional position is 12,500 in P&L. That sounds great on paper. The problem is that the same move against you produces the same loss if you are not cut out by a stop first.
These numbers are there to remind you how sensitive highly leveraged positions are. They are not targets to chase, and they are not typical outcomes.
4. Add your stop-loss order before you enter
Here is another common leak. Many traders open leverage positions and only think about the stop after the fact. That’s how you end up with avoidable liquidations.
If you are still learning about trading with borrowed funds you really need to pay attention to this part.
Before you enter any position, always add your stop-loss order, period.
Why is this important?
This is important for one single reason, volatility.
Market volatility combined with a high ratio can easily liquidate your whole account in a matter of seconds if you are not careful.
I lost a lot of money early on by clicking in without a predefined exit. My position sizing and risk management were an afterthought, and the market punished that.
What could happen is that as soon as your press the buy button the market starts falling.
If you are lucky, the market returns fast to your entry price, and no harm is done, however, sometimes the market keeps falling, and falling.
A falling market without a stop-loss order, is doomed to fail.
I’m not saying that this will happen every time you open a position, on the contrary, your position might result in a super quick profit.
However, as traders, we always want to watch out for those worst-case scenarios.
This is why we always make sure that our positions are properly secured, the same way that you would put on your seatbelt when you get into a car.
If you make the stop part of the order from the start, you cut out one of the easiest ways to blow up. It won’t make you profitable on its own, but it will remove some very unnecessary pain.
5. Avoid rang-bound markets
I have touched upon this topic in the first strategy but I want to explain further the concept of why you need to avoid a range-bound market.
A range-bound market is a forex pair, a stock, or a cryptocurrency that is currently traded in a tight trading range.
How is this bad for a trader that is using borrowed funds and why should we avoid it?
Here is the thing.
A range-bound market is going to chop up and down all the time without any directional movements.
It will jump up a few pips or points only to turn back to the same price and start chopping to the downside, and then the cycle repeats.
What will happen here is that when you enter on margin, your liquidation price will be very close to your entry price, and if you open a position that is not going to trend in one direction, you will lose money.
None is skilled enough to predict when the price will go up or down in a choppy environment, there is just too much randomness.
To increase your probability of a successful trade, you need to find a market that is currently trending.
In a clear trend, more of your entries will line up with the flow, as long as you avoid chasing and stick to your pullback rules. You will still have losers. They just tend to be easier to understand.
Take a look at the screenshot below of a choppy trading day in BTCUSD:
All of the arrows you see are small breakouts below a range where all of them would result in a quick loss because the price return back to the entry price within a couple of seconds or minutes.
Compare this image to the one from the first strategy and you will see the difference.
You want to avoid these kinds of days where the price doesn’t have a clear trend.
6. Use the correct technical indicator
Which technical indicator do you think is the best in a strategy?
If you guessed volume you are right.
Volume is one of the few leading indicators that will show you confirmation on the important parts of the chart, such as breakouts, and fakeouts.
When you see a breakout through a range you want to see that the move is backed up by other traders, or real volume so to speak.
Below is a screenshot of BTCUSD where the price has been trading in a range of more or less the whole day but in the evening we have a strong breakout followed by heavy volume.
Notice how the rest of the price action is mostly one-sided with a steady price increase.
Other breakouts follow which are also accompanied by higher volume, something that is very common.
This is something you want to see every time you are looking to enter during a breakout.
It’s also something that will give you strong confirmation that the price could continue during the rest of the day.
At the very least, it can help you filter for trades that align with real participation, not just thin liquidity. That tends to improve your odds over a large sample, not on any single setup.
You can combine other indicators that you like as long as you use volume to confirm your hypothesis.
7. Always use negative balance protection
If you are a forex trader and you trade on a high leverage forex broker you don’t have to worry about this since most brokers have negative balance protection by default.
However, if you are using leverage in CFDs, then you need to pay some attention to this part.
There are still some brokers out there who will let their clients go into debt from margin trading.
Traders go into debt with their brokers when the losses outsize their initial deposit and this can only happen when there is no negative balance protection in place.
For example, when you deposit $2000 and you lose $5000 on a trade, then technically, you owe the broker $3000.
Not many brokers will let this happen but I’ve seen far too many traders lose out on a highly leveraged position and then they lose more than they have in their trading account.
The easy thing to do here is to avoid using a broker that doesn’t offer negative balance protection.
How can you know that your broker offers this?
It’s simple, every broker should clearly explain to their clients if they have this protection against losses.
Take a look at this screenshot.
Valutrades is a popular broker and they highlight the negative balance protection on their home page.
This is something that you want to see on your broker as well.
This will not protect you from losing money but it will protect you from going into debt, something that could occur when using a high ratio.
8. Raise your stop-loss fast
Here is a great strategy that every trader should employ in their daily activities and it has to do with how you protect against losses.
When you open a position in the market, three things can happen.
- You could lose out immediately which is nothing unusual.
- The market ends up not moving and you break even.
- The market starts trading up and you make money from the first 10 seconds.
You will probably experience all of these scenarios as you trade your favorite altcoin, penny stock, or forex pair.
For situations 1 and 2, you can’t do much other than accept the fact that today was not the right day.
However, when you find yourself in situation 3, you have a couple of decisions to make, and depending on what you do here you could become a successful short-term day trader.
Most short-term traders don’t raise their stop-loss because they fear that the market will stop them out too soon and they will miss the whole rally.
This mindset is completely wrong, here is why.
You can’t be personally attached to any position or you will end up making the same mistakes over and over again.
When you open a position and you find yourself in an early profit, raise your SL to breakeven or slightly positive.
From here, see what happens.
Sometimes the market stops your our at a breakeven, which is perfectly fine, as long as you didn’t lose money on that particular trade.
What could also happen is that the price keeps trending up and you get to lock in more profit, which is something that you don’t know.
As a trader using leverage, your first job is to protect the downside so you can stay active tomorrow. More trades simply mean more chances for your edge to play out, not guaranteed “big gains”.
That’s how you need to play it. Focus on limiting your downside at all costs and the upside will take care of itself.
Try this out and you will be surprised to see how often the market just carries you upwards from time to time.
A few of these moves will stand out on your equity curve. They won’t show up every week. When they do, your job is to lock in a chunk of that move and not give it straight back on the next three trades.
9. Don’t deposit more than you can afford to lose
Let’s just face it, high leverage brings high risk, that’s it.
If you are getting into this game you should know that you are running a high risk of losing all the money you have deposited in your account.
This is something that we as traders have to accept or else can’t be a part of the game.
This is why I always preach that you should never deposit more money than you can afford to lose.
Even if your first deposit is small, that is fine. What matters is that you size your risk off that small amount and don’t try to use extreme leverage to “fix” the lack of capital.
When you speculate with borrowed money, accept upfront that a few bad trades can empty the account if you ignore risk. If that thought makes you uneasy, scale down until it doesn’t.
If you can’t accept that, then this style of investing is not for you.
However, if you are fine with that, calculate how much you can afford to lose and make your deposit.
I started out with a deposit of $500 even though I had more money in my regular bank account.
However, I could not afford to lose more than $500.
The more you practice in a structured way, the better your decisions get. You don’t need to “blow up accounts” as a rite of passage. Your goal is to make each mistake small enough that you can keep learning.
There may be a point where you can scale deposits and pull regular profits. That tends to come after years of screen time, not weeks. Until then, keep deposits modest and treat every blown rule as a serious warning.
Final words
In this guide I’ve broken down 18 leverage trading strategies that I actually use, across both higher and lower effective leverage.
Each strategy is either a way to protect your downside, structure your entries, or hold winning trades with more intent. None of them remove risk.
I suggest that you go through all of them one by one and write down the most important things that you read. From here, start by implementing each strategy in your daily trading activities for the best result.
Leverage trading strategies are building blocks for traders who already understand the basics of markets and risk.
I highly recommend that you read all strategies from top to bottom as they all come together in one way or another.
If you apply these ideas with discipline and track your trades honestly, you should get clearer feedback from the market over time. For more detail on risk-first leverage trading, read our guide on leverage trading tips.
Anton Palovaara
This article is published under Leverage.Trading’s Risk-First Education Framework, an independent learning system built to help traders quantify and manage risk before trading.
