One of the popular strategies is trading with leverage or margin trading (margin from the English “margin” – profit).
Let’s say your trading capital is 100,000 rubles. Your goal is to earn at least 1% or more from each transaction daily. That is, from each transaction you can expect to receive a profit of 1000 rubles per day or more. Not bad.
Let’s also assume that your goal is to accumulate 200,000 rubles in this way. Let’s calculate how long it will take to do this in trading days, provided that you put all the money you earn into use (see Table 1 below). As you can see, it will take 71 trading days or about 3.25 months of trading on the MICEX.
Table 1.
| Trading Day | Current account size | Income per day | Profit per day |
| 1 | 100000 | 1% | 1000 |
| 2 | 101000 | 1% | 1010 |
| 3 | 102010 | 1% | 1020,1 |
| 4 | 103030,1 | 1% | 1030,301 |
| 5 | 104060,401 | 1% | 1040,604 |
| 6 | 105101,005 | 1% | 1051,01 |
| 7 | 106152,0151 | 1% | 1061,52 |
| 8 | 107213,5352 | 1% | 1072,135 |
| 9 | 108285,6706 | 1% | 1082,857 |
| 10 | 109368,5273 | 1% | 1093,685 |
| 11 | 110462,2125 | 1% | 1104,622 |
| 12 | 111566,8347 | 1% | 1115,668 |
| 13 | 112682,503 | 1% | 1126,825 |
| 14 | 113809,328 | 1% | 1138,093 |
| 15 | 114947,4213 | 1% | 1149,474 |
| 16 | 116096,8955 | 1% | 1160,969 |
| 17 | 117257,8645 | 1% | 1172,579 |
| 18 | 118430,4431 | 1% | 1184,304 |
| 19 | 119614,7476 | 1% | 1196,147 |
| 20 | 120810,895 | 1% | 1208,109 |
| 21 | 122019,004 | 1% | 1220,19 |
| 22 | 123239,194 | 1% | 1232,392 |
| 23 | 124471,586 | 1% | 1244,716 |
| 24 | 125716,3018 | 1% | 1257,163 |
| 25 | 126973,4649 | 1% | 1269,735 |
| 26 | 128243,1995 | 1% | 1282,432 |
| 27 | 129525,6315 | 1% | 1295,256 |
| 28 | 130820,8878 | 1% | 1308,209 |
| 29 | 132129,0967 | 1% | 1321,291 |
| 30 | 133450,3877 | 1% | 1334,504 |
| 31 | 134784,8915 | 1% | 1347,849 |
| 32 | 136132,7404 | 1% | 1361,327 |
| 33 | 137494,0679 | 1% | 1374,941 |
| 34 | 138869,0085 | 1% | 1388,69 |
| 35 | 140257,6986 | 1% | 1402,577 |
| 36 | 141660,2756 | 1% | 1416,603 |
| 37 | 143076,8784 | 1% | 1430,769 |
| 38 | 144507,6471 | 1% | 1445,076 |
| 39 | 145952,7236 | 1% | 1459,527 |
| 40 | 147412,2509 | 1% | 1474,123 |
| 41 | 148886,3734 | 1% | 1488,864 |
| 42 | 150375,2371 | 1% | 1503,752 |
| 43 | 151878,9895 | 1% | 1518,79 |
| 44 | 153397,7794 | 1% | 1533,978 |
| 45 | 154931,7572 | 1% | 1549,318 |
| 46 | 156481,0747 | 1% | 1564,811 |
| 47 | 158045,8855 | 1% | 1580,459 |
| 48 | 159626,3443 | 1% | 1596,263 |
| 49 | 161222,6078 | 1% | 1612,226 |
| 50 | 162834,8338 | 1% | 1628,348 |
| 51 | 164463,1822 | 1% | 1644,632 |
| 52 | 166107,814 | 1% | 1661,078 |
| 53 | 167768,8921 | 1% | 1677,689 |
| 54 | 169446,5811 | 1% | 1694,466 |
| 55 | 171141,0469 | 1% | 1711,41 |
| 56 | 172852,4573 | 1% | 1728,525 |
| 57 | 174580,9819 | 1% | 1745,81 |
| 58 | 176326,7917 | 1% | 1763,268 |
| 59 | 178090,0597 | 1% | 1780,901 |
| 60 | 179870,9603 | 1% | 1798,71 |
| 61 | 181669,6699 | 1% | 1816,697 |
| 62 | 183486,3666 | 1% | 1834,864 |
| 63 | 185321,2302 | 1% | 1853,212 |
| 64 | 187174,4425 | 1% | 1871,744 |
| 65 | 189046,1869 | 1% | 1890,462 |
| 66 | 190936,6488 | 1% | 1909,366 |
| 67 | 192846,0153 | 1% | 1928,46 |
| 68 | 194774,4755 | 1% | 1947,745 |
| 69 | 196722,2202 | 1% | 1967,222 |
| 70 | 198689,4424 | 1% | 1986,894 |
| 71 | 200676,3368 | 1% | 2006,763 |
Now let’s assume that you would like to get your 200,000 faster and decide to take a leverage of 3x, which is equivalent to 100,000 x 3 = 300,000 rubles. The goal is the same – 200,000 rubles. That is, with a trading account size of 400,000 rubles, you get the target amount. We make the calculation in Table 2.
Table 2.
| Trading Day | Current account size | Income per day | Profit per day |
| 1 | 300000 | 1% | 3000 |
| 2 | 303000 | 1% | 3030 |
| 3 | 306030 | 1% | 3060,3 |
| 4 | 309090,3 | 1% | 3090,903 |
| 5 | 312181,203 | 1% | 3121,812 |
| 6 | 315303,015 | 1% | 3153,03 |
| 7 | 318456,0452 | 1% | 3184,56 |
| 8 | 321640,6056 | 1% | 3216,406 |
| 9 | 324857,0117 | 1% | 3248,57 |
| 10 | 328105,5818 | 1% | 3281,056 |
| 11 | 331386,6376 | 1% | 3313,866 |
| 12 | 334700,504 | 1% | 3347,005 |
| 13 | 338047,509 | 1% | 3380,475 |
| 14 | 341427,9841 | 1% | 3414,28 |
| 15 | 344842,264 | 1% | 3448,423 |
| 16 | 348290,6866 | 1% | 3482,907 |
| 17 | 351773,5935 | 1% | 3517,736 |
| 18 | 355291,3294 | 1% | 3552,913 |
| 19 | 358844,2427 | 1% | 3588,442 |
| 20 | 362432,6851 | 1% | 3624,327 |
| 21 | 366057,012 | 1% | 3660,57 |
| 22 | 369717,5821 | 1% | 3697,176 |
| 23 | 373414,7579 | 1% | 3734,148 |
| 24 | 377148,9055 | 1% | 3771,489 |
| 25 | 380920,3946 | 1% | 3809,204 |
| 26 | 384729,5985 | 1% | 3847,296 |
| 27 | 388576,8945 | 1% | 3885,769 |
| 28 | 392462,6634 | 1% | 3924,627 |
| 29 | 396387,2901 | 1% | 3963,873 |
| 30 | 400351,163 | 1% | 4003,512 |
Magic has happened – you will need only 30 trading days, i.e. only 1.5 months. Yes, of course, do not forget about the tax, the commission for leverage. But these are details. The main principle.
Sounds very tempting, doesn’t it?
This is in theory. In practice, there are always a lot of nuances that do not allow you to do this. That’s what the exchange is for. If everyone only got rich, then the exchange would have gone bankrupt long ago.
You need to understand that you have 100,000 rubles in case of regular losses, for example, for 3 days in a row, using a stop-loss order of 1%, you lose 3,000 rubles and reduce your account to 97,000 rubles. If the amount is 300,000 rubles, taking into account the leverage of 3x, then 3 days of losses by 1% will reduce your account by 9,000 rubles and actually your funds will remain 91,000 rubles, i.e. You lose 9% in 3 days! Bad, right? That’s business.
In this simple typical situation, we have shown just the very thing that will make you fight with yourself, with your conscience. After all, you have only 100,000 rubles of your money, and you borrow 200,000 rubles. It should be understood that in this case there is no broker’s risk – the risk is entirely yours – only you lose money. When a certain amount is reached on your account, the broker will simply stop this fun by selling all your assets and taking all his money and commission. The balance, if there is one (the BINANCE exchange simply liquidates your account, leaving 0 rubles), will remain on the account.
And imagine that you decided to take a risk – a Porsche or a walrus – and took a 10x shoulder! I.e. now you have 1,000,000 rubles at your disposal. Then, with 3 days of losses of 1%, you already lose 30,000 rubles, i.e. 30% of the account. Are you ready for this? This should be found out in front of the mirror before the start of trading.
If there is uncertainty, do not start playing games with your conscience, they will begin as soon as you realize the horror of the situation, and you will limply freeze in panic in front of the monitor, watching as someone brazenly devours your dream before your eyes. After all, we don’t know if you are using a stop loss or not. The drawdown can be so rapid that you can get a loss of 7% in 1 day and 10%! I.e. if you have a leverage of 10x at 10% loss, you lose all your money. If you have a clear plan and firm confidence, you have calculated everything – good luck.