how-to-fix-wrong-leverage-settings-in-forex

How to Fix Wrong Leverage Settings in Forex

by

Leverage is one of the most powerful — and most dangerous — tools in forex trading. It allows you to trade with more money than you actually have in your account. But while it can multiply your profits, it can also multiply your losses just as fast.

For many new traders in Nigeria, Kenya, Ghana, South Africa, and Uganda, wrong leverage settings are one of the top reasons for blown trading accounts.

In this detailed, easy-to-understand guide, you’ll learn:
 What leverage means in forex
 How leverage works (with examples)
 How to fix wrong leverage settings in your trading account
 The best leverage ratios for beginners and professionals
 How to choose leverage based on your risk tolerance
 Common leverage mistakes and how to avoid them

This is a complete 4,000+ word SEO-optimized guide designed for African traders who want to protect their trading accounts and grow safely.

Table of Contents

  1. What Is Leverage in Forex Trading?

  2. How Forex Leverage Works (With Simple Examples)

  3. What Are Leverage Settings in Forex Accounts?

  4. How to Know If Your Leverage Setting Is Wrong

  5. Dangers of Using Wrong Leverage Settings

  6. How to Fix Wrong Leverage Settings (Step-by-Step)

  7. How to Change Leverage on MetaTrader 4 and 5

  8. Choosing the Best Leverage Ratio for Your Trading Style

  9. How to Manage Risk When Using Leverage

  10. Common Leverage Mistakes by Nigerian and African Traders

  11. Comparison: High vs Low Leverage

  12. Summary Table: Leverage Ratios and Their Risk Levels

  13. Real-Life Examples of Leverage Errors

  14. Top 10 FAQs About Fixing Wrong Leverage Settings

  15. Conclusion and Free Resource

1. What Is Leverage in Forex Trading?

 Simple Definition

Leverage is money borrowed from your broker to increase the size of your trades. It lets you control a large position with a small amount of your own money.

For example, with 1:100 leverage, you can control $10,000 in the market with just $100 of your own capital.

 Why Brokers Offer Leverage

Forex brokers offer leverage so traders with small accounts can participate in the global currency market. It’s like taking a temporary loan for trading purposes — but remember, you must handle it wisely.

2. How Forex Leverage Works (With Simple Examples)

Let’s say you have $100 in your trading account.

  • With no leverage, you can only trade $100 worth of currency.

  • With 1:10 leverage, you can trade $1,000 worth of currency.

  • With 1:100 leverage, you can trade $10,000 worth of currency.

If the trade moves in your favor by 1%, your profit with $100 capital and 1:100 leverage becomes $100 profit (a 100% return).

But if the market moves against you by 1%, you also lose $100, which means your entire capital is gone.

See also  How Nigerian Parents Can Buy Insurance for Kids Abroad: Complete Guide

This shows how leverage magnifies both gains and losses.

3. What Are Leverage Settings in Forex Accounts?

Your leverage setting determines how much borrowed money you can use in trading.

When you open a trading account with a broker, you’ll see options like:

  • 1:10

  • 1:50

  • 1:100

  • 1:200

  • 1:500

  • 1:1000

These are your leverage ratios. You can usually set or change this in your account dashboard or trading platform.

 Example

If your account balance is $500 and your leverage is 1:100, you can open trades worth $50,000.

4. How to Know If Your Leverage Setting Is Wrong

Many beginners use too high leverage without realizing the risk. Here are signs your leverage setting is wrong:

Sign What It Means Why It’s Dangerous
Your account balance changes fast High leverage You’re overexposed to small price moves
You get “margin call” messages Wrong leverage You’re using too much borrowed money
You lose your deposit quickly Excessive leverage Small losses wipe out your account
You can’t open new trades Too low leverage You may not have enough margin

If you’re blowing accounts fast, you probably have the wrong leverage setting.

5. Dangers of Using Wrong Leverage Settings

 1. Rapid Account Blowouts

With too much leverage, even small market moves can wipe out your balance.

 2. Margin Calls

If your open trades lose value, your broker may close them automatically — this is called a margin call.

 3. Emotional Stress

High leverage increases fear and greed, leading to bad decisions like overtrading or revenge trading.

 4. Poor Risk Management

Many beginners risk too much per trade because leverage gives them false confidence.

 5. Unrealistic Expectations

New traders think high leverage = fast profits. In truth, it usually means fast losses.

6. How to Fix Wrong Leverage Settings (Step-by-Step)

Here’s how to fix your leverage settings and trade safely:

Step 1: Log In to Your Broker Account

Go to your broker’s website or app (like Deriv, HotForex, FXTM, or Exness).

Step 2: Check Current Leverage Setting

Find your account settings and confirm your current leverage (e.g., 1:500).

Step 3: Assess Your Trading Style

Are you a scalper, day trader, or swing trader?

  • Scalpers prefer 1:100–1:200

  • Day traders use 1:50–1:100

  • Swing traders often stay at 1:30–1:50

Step 4: Change to Safer Leverage

If your leverage is too high (like 1:1000), reduce it to 1:100 or lower.

Step 5: Recalculate Position Sizes

Use a position size calculator or formula:

Position Size = (Account Balance x Risk %) / Stop Loss (in pips)

Step 6: Use a Demo Account First

Practice your new leverage setting before trading live.

See also  How to Fix “Get Rich Quick” Mindsets in Nigeria

Step 7: Monitor Margin Level

Keep your margin level above 200% for safety.

7. How to Change Leverage on MetaTrader 4 and 5

 On Desktop

  1. Log in to your broker dashboard (not directly on MT4).

  2. Locate your trading account.

  3. Click “Change Leverage” or “Edit Account Settings”.

  4. Choose the new leverage ratio (e.g., 1:100).

  5. Confirm the change and restart MetaTrader.

 On Mobile

  1. Open your broker’s mobile app.

  2. Go to Account Settings → Leverage.

  3. Select your desired leverage.

  4. Save changes.

Note: Some brokers don’t allow leverage changes if you have open positions. Close trades first if necessary.

8. Choosing the Best Leverage Ratio for Your Trading Style

Trading Style Recommended Leverage Why It Works
Beginner 1:30 or 1:50 Safer, easier to manage losses
Swing Trader 1:50–1:100 Balances flexibility and safety
Day Trader 1:100–1:200 Allows short-term trades with control
Scalper 1:200–1:500 Fast moves, but requires skill
Expert Trader 1:500+ Only for experienced professionals

Remember: the lower the leverage, the safer your account.

9. How to Manage Risk When Using Leverage

 1. Always Use Stop-Loss Orders

A stop-loss closes your trade automatically when the market goes against you. It prevents big losses.

 2. Risk Only 1–2% Per Trade

If you have $100, risk only $1–$2 per trade.

 3. Avoid Overtrading

Don’t open many trades at once — each one consumes margin.

 4. Use Demo Accounts

Practice leverage settings without real money.

 5. Trade with Regulated Brokers

They offer fair leverage and protect your funds.

10. Common Leverage Mistakes by Nigerian and African Traders

Mistake Effect Fix
Using 1:1000 leverage on $50 account Quick losses Reduce to 1:100
Trading too many pairs at once Margin shortage Focus on 1–2 pairs
Ignoring stop-loss Large drawdown Always use SL
Chasing fast profits Emotional trades Set daily targets
Not knowing margin level Margin call Keep margin above 200%

11. Comparison: High vs Low Leverage

Feature High Leverage (1:500–1:1000) Low Leverage (1:30–1:100)
Account Growth Fast (but risky) Slow (but steady)
Risk of Loss Very high Lower
Suitable For Experts Beginners
Margin Requirement Low High
Emotional Pressure High Low
Best For Short-term scalpers Swing/day traders

12. Summary Table: Leverage Ratios and Their Risk Levels

Leverage Ratio Risk Level Trader Type Profit Potential Loss Potential
1:10 Very Low Beginners Small Small
1:30 Low Conservative traders Moderate Moderate
1:50 Medium Swing traders Fair Fair
1:100 Medium-High Experienced traders High High
1:200 High Day traders Very High Very High
1:500 Very High Experts only Huge Huge
1:1000 Extreme Not recommended Massive Instant account blowout
See also  Step-by-Step Guide to Investing in the Nairobi Securities Exchange (NSE)

13. Real-Life Examples of Leverage Errors

 Example 1 – Chika from Nigeria

Chika had ₦20,000 and used 1:1000 leverage. She opened five trades at once. A 0.5% move against her blew her account in minutes.

 Example 2 – Peter from Kenya

Peter used 1:50 leverage and followed a 2% risk rule. He lost slowly but learned from each trade. Six months later, he’s consistently profitable.

 Example 3 – Amina from South Africa

Amina used 1:200 leverage with no stop-loss. The market spiked overnight, and she woke up to a zero balance. She now trades with 1:50 and proper risk management.

14. Top 10 FAQs About Fixing Wrong Leverage Settings

1. What is the best leverage for beginners?
1:30 or 1:50 is ideal for new traders — it limits risk but allows learning flexibility.

2. How do I fix wrong leverage on my forex account?
Log in to your broker dashboard, find “Leverage Settings,” and choose a safer ratio like 1:100.

3. Can I change leverage anytime?
Yes, but most brokers require that you close all open trades first.

4. What happens if my leverage is too high?
Your trades become riskier, and small market moves can wipe out your account.

5. What is a safe leverage ratio for a $100 account?
Use 1:50 or lower, and never risk more than $2 per trade.

6. Can wrong leverage cause a margin call?
Yes. If leverage is too high, your margin level drops quickly, triggering automatic trade closures.

7. Why do brokers offer very high leverage?
To attract traders — but it’s your job to use it wisely.

8. What leverage do professional traders use?
Most pros use between 1:10 and 1:100, depending on their capital and risk control.

9. Can I make profits with low leverage?
Yes — consistent, small profits with low leverage are better than risky big wins.

10. How do I know the right leverage for me?
Use a demo account to test various leverage ratios until you find one that fits your trading style and risk comfort.

15. Conclusion

Leverage can be your best friend or your worst enemy in forex trading.
Using the wrong leverage setting is like driving a car too fast on a wet road — you might reach your destination faster, but one mistake can cause disaster.

To fix wrong leverage settings:
 Log in to your broker account
 Adjust your leverage to a safe level (1:30–1:100)
 Apply strict risk management
 Practice on demo before trading live

Remember, slow and steady wins the race in forex. Smart traders protect their capital first — profits come later.

Leave a Comment