The higher the leverage you use, the harder it's going to be for you to make money. The more leverage you use the more value each pip has. Since the pips are worth more, you have to risk fewer pips per trade to avoid risking your account's wellbeing.
Here's the problem. When you risk fewer pips, you'll get stop too close to the market's current price. Then any market "hiccup" will take you out with a loss. If you had lower leverage, you would have had more room for the trade, and it may have very likely become a winner.
Many new forex traders are trying to trade with these really tight stops (10 to 15 pips). That's way too close. Decrease your leverage and give your trades some room to breathe. You'll probably find that you have more winning trades.
Another reason why you shouldn't trade with tight stops is that it becomes a known target for Forex Brokers and will be triggered if possible to take your money however small your trade. There is ample evidence that this practice occurs and is also applied to Take Profit orders.
According to Dirk Du Toit, acclaimed forex mentor and author of Bird Watching In Lion Country, there isn't one wiped out trading account that wasn't leveraged too high. He also believes that there is no evidence of any sustained profitable trading that is based on high leveraged, short-stop trading.
The meaning of margin in forex is the amount of collateral the trader deposits with the broker when borrowing from the broker to trade currencies. Most forex brokers use the terms "leverage" and "margin" in a loose and interchangeable fashion and this causes confusion amongst traders. Most likely this is done on purpose: - the brokers want newbie traders in particular to see "leverage" as an opportunity not as something which is very destructive and dangerous if abused.
