Leverage Discipline as a Rule

Everything in this track is easy to agree with in the abstract and hard to obey in front of a screen after three losses. The fix is not more willpower. It is writing the limits down while you are calm, so that the decision in the moment is follow the rule or break it rather than what should I do here.

Available leverage versus used leverage

Available leverage is what the broker permits — 1:100, 1:500, whatever the account offers. Used leverage is what you actually take, and it is the only one that affects your account.

Note what the available leverage did in that table: nothing. The first row is the same 0.20 lots whether the account offers 1:30 or 1:500. Available leverage decides only the margin the broker sets aside, and margin is not risk — Track 1, lesson 4 made that distinction and this is where it pays off.

A total exposure cap

Per-trade sizing controls one trade. A cap on used leverage controls the book, and it catches the failure the previous lesson described — several correctly sized positions adding up to one oversized one.

• Under 10:1 used leverage is where most retail plans that survive actually sit.
• 10:1 to 20:1 is workable for a short-term method with tight stops, and demands the correlation checks.
• Above 20:1 means a few ordinary adverse moves reach your stop-trading level in a single session.

The cap works as a second gate, not a replacement. A position passes only if it satisfies the per-trade risk rule and leaves total used leverage under the ceiling. When the two disagree, the smaller number wins.

Margin level as an alarm, not a plan

Your platform shows a margin level percentage. Treat any reading under 300% or 400% as a signal that the book is too large for the balance — long before the broker's margin call level, which is a liquidation threshold and not a risk limit.

Scaling down after losses

Sizing off the current balance already reduces your risk automatically as the account falls. A deliberate reduction on top of that is worth writing in, because a drawdown is when both your edge and your judgement are least reliable.

Half size is the useful middle setting. It keeps you trading and gathering information while roughly quartering the damage a continuing drawdown can do, and it is far more likely to be obeyed than a rule that demands you stop entirely.

Scaling up, slowly

Growth comes from the balance rising, not from the percentage rising. Sizing from a fixed percent of a growing account compounds on its own, and that is almost always enough.

If you do want to raise the percentage itself, treat it as a change to the plan and give it conditions:

1. At least 100 more trades at the current level, with a positive expectancy over them.
2. No breach of your drawdown limits during that stretch.
3. The risk of ruin recomputed at the new percentage, still under your threshold.
4. One step at a time — 1% to 1.25%, not 1% to 2% — and held for another hundred trades before the next.

The page to keep

The whole track fits on one page, and that page belongs next to your screen rather than in your memory:

• Risk per trade: ____% of the current balance, recomputed each trade.
• Stop: at the level that invalidates the idea, never at the loss that feels affordable.
• Size: rounded down, always.
• Net risk on one currency: under ____%. Total open risk: under ____%.
• Used leverage: under ____:1.
• Daily stop: ____ losses or ____%. Monthly stop: ____%.
• Size increases: only after 100 trades and a recomputed risk of ruin.

Fill in the blanks from your own numbers, not from this page's defaults. A plan you derived is a plan you will follow at the moment it becomes inconvenient, which is the only moment any of it matters.