On eToro, X1 leverage represents the minimum leverage for any asset, essentially meaning there's no leverage applied. It is the default setting for traders who prefer not to employ leverage in their trades. Choosing X1 ensures you're trading solely with your own capital without any amplification.
76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Leverage in trading can be likened to a magnifying glass, amplifying both potential profits and losses. Curious about this feature, I delved into the eToro platform, and here's my perspective on utilizing X1 leverage, including a brief on how to set it.
When you opt for the X1 eToro leverage, it essentially means you're not applying any leverage to your trade. To put it simply, if you're trading with $10 using X1 leverage, you are, in essence, trading with your original $10, neither magnifying nor diminishing its value.
If you intend to trade using X1 leverage on eToro, there's no extra configuration required. This is due to eToro's default setting for any trade being X1, implying no leverage.
For those looking to venture beyond X1, eToro offers various leverage options, including:
It's crucial to understand that employing a leverage higher than X1 inherently amplifies your risk exposure. For instance, with X2 leverage, your invested capital is effectively doubled.
It's also important to know that not all of these leverage options are applicable on all assets. For example, crypto assets like Bitcoin will only allow you to use leverage of up to X2.
It's worth noting that any asset traded with leverage exceeding X1 is treated as an eToro CFD, or Contract for Difference. Whether you're trading stocks, crypto, or any other asset with X2 leverage or higher, it falls under the category of contracts for difference.
Leverage carries the inherent trait of magnifying both your potential gains and losses. With X1 being the default setting on eToro, it indicates a trade without any leverage application. For the most cautious and low-risk approach, I strongly advise that you use X1 leverage.
💡Tip: When I first started out, I utilized the eToro demo account to familiarize myself with higher leverage trading. This allowed me to explore and understand the feature effectively without any financial risk.
Leveraging on eToro can amplify potential profits, but it's a double-edged sword that might magnify losses if investments decline in value. For those wary of leveraging, sticking to X1 is a prudent choice. It's wise to employ leverage under favorable market conditions or clear advantages. Utilizing risk management tools like stop loss and take profit can help mitigate potential downsides while leveraging.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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