Currency trading
 

I want to get into currency speculation. I'm going to invest in medium term. First of all, how much leverage is advisable if I want to be fairly conservative? What should my stop loss limit be? I know these questions are very general and probably hard to answer but I would appreciate any advice.

Re: Currency trading
 

I would advise you to open a play money account at one of the forex brokers and trade that before you put any real money into an account. The leverage on mini-Forex accounts is huge (like 40:1) and on regular accounts is about 20:1 so you can get wiped out fast.

You need to do some serious reading, but I don't trade forex and I don't know what the best things to read would be. You can also speculate on currencies with ETFs that don't offer any leverage (unless you're in a margin account) which would be safer than trading in a forex account.

Re: Currency trading
 

Yeah I was thinking in the terms of 5:1 leverage. Putting in two-three trades as a supplement to a broader portfolio. I'm very bearish on equities and don't feel comfortable holding big parts of my portfolio in equities. I'm looking to hold for a while unless the I feel the prices quickly converge to a level I feel is appropriate. I really just want some general information from some experienced currency traders/investors.

Re: Currency trading
 

Mort, you can get 200:1 leverage on a mini account, which is limited to $10,000. If you are playing with more than $10,000 you have to open a regular account with less leverage.

Stick $2000 in a mini account and you can play $400,000 worth of currency. That should be plenty until you get some experience.

Re: Currency trading
 

Can anybody recommend any good sources for currency trading?

Re: Currency trading
 

Jeez, google forex and you'll get a bazillion hits.

Re: Currency trading
 

[ QUOTE ]
I want to get into currency speculation. I'm going to invest in medium term. First of all, how much leverage is advisable if I want to be fairly conservative? What should my stop loss limit be? I know these questions are very general and probably hard to answer but I would appreciate any advice.

[/ QUOTE ]

Firstly, you need to study the basics of trading which can apply to any market, and then open a play money account to practice trading. The placement of stops is a huge topic but there's lots of literature available. Currencies are also not suitable for investment. You can take long-term trades, but investing in them is 0EV at best.

As for leverage and stops, I'd suggest you ring-fence some money you can afford to lose. Take a position and place a logical stop (its placement will need to be decided by you so it meets your trade objectives) and leverage your position so that should your stop be hit, you'll lose no more than 1% (conservative) or 2% (a little more of a gamble) of your ring-fenced account.

Talking about 5:1 and 20:1 leverage insn't really helpful. You need to think in terms of how much of your account is at risk when you place an order.