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which leverage ratio is good?
8 Answers
<p>In general, ratios that fall between 0.1 and 1.0 are considered desirable by most businesses. Having a leverage ratio of 1, which is generally considered as the ideal leverage ratio, indicates that the company has equal amounts of debt and the other, comparable metric being measured.</p>
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<p>Any leverage ratio higher than 1 is usually considered alarming, meaning that the company has incurred massive amounts of debt and is facing the risk of not being able to pay off its debt obligations as they come due.</p>
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<p>Generally, a ratio of 3.0 or higher is desirable, although this varies from industry to industry.</p>
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<p id="isPasted">Forex traders should choose the level of leverage they are most comfortable with. If you are conservative and don’t like taking many risks, or if you’re still learning how to trade currencies, a lower level of leverage like 5:1 or 10:1 might be more appropriate.</p><p>Trailing stops or limits offer investors a reliable way to reduce losses when a trade moves in the wrong direction. By using limit stops, investors can ensure they can continue to learn how to trade currencies, but limit potential losses should a trade fail. These stops are also important because they help reduce the …</p>
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<p id="isPasted">Leverage is a double-edged sword, meaning that the more leverage you use, the more profit you will get if it is to your advantage, but the more losses you will incur if it is not. In just a second, your account could be wiped out. That's how it works!</p><p>That is why new retail traders need to start with no leverage, but if you wish to use leverage, you can consider starting with up to 10x and then gradually increasing by the time you are making a consistent profit.</p><p>The downside of lower leverage is that you won't get much …</p>
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