# Finding the right "leverage" to use for maximum performance **URL:** \ **Category:** Trading and Markets\ **Created:** [April 19, 2020, 6:18pm UTC](https://forums.collective2.com/t/finding-the-right-leverage-to-use-for-maximum-performance/13998 "2020-04-19T18:18:51Z")\ **Posts on this page:** 8\ **Page:** 2
**Author:** ![D\_Financial](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/d_financial/32/13320_2.png) [@D\_Financial](https://forums.collective2.com/u/D_Financial)\ **Post date:** [April 27, 2020, 10:49pm UTC](https://forums.collective2.com/t/finding-the-right-leverage-to-use-for-maximum-performance/13998/21 "2020-04-27T22:49:31Z")
> [@LiveForexSignals](#): > > Of course there is. Again, not what I said. I understand a basic leverage calculation. That was not the point of my post or your original post. You asked how to know the following… > [@LiveForexSignals](#): > > So how do you know if a trader is “over” or “under” leveraged? To that I replied that there isn’t one metric. Can we at least agree on that? If you are going to continue to misquote me, I don’t understand the need for me to continue posting. ---
**Author:** ![LiveForexSignals](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/liveforexsignals/32/1905_2.png) [@LiveForexSignals](https://forums.collective2.com/u/LiveForexSignals)\ **Post date:** [April 27, 2020, 10:58pm UTC](https://forums.collective2.com/t/finding-the-right-leverage-to-use-for-maximum-performance/13998/22 "2020-04-27T22:58:28Z")
> [@D\_Financial](#): > > To that I replied that there isn’t one metric. Can we at least agree on that? Yes, you did say that “there isn’t one metric”, but then you started to talk about maximum drawdowns, the financial instruments being traded, length of drawdowns, etc… Granted, these metrics are important, but they have very little to do with the only two definitions of leverage, as mentioned above. ---
**Author:** ![D\_Financial](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/d_financial/32/13320_2.png) [@D\_Financial](https://forums.collective2.com/u/D_Financial)\ **Post date:** [April 27, 2020, 10:59pm UTC](https://forums.collective2.com/t/finding-the-right-leverage-to-use-for-maximum-performance/13998/23 "2020-04-27T22:59:26Z")
But they have a lot to do with your question of being over or under leveraged which I was attempting to address. ---
**Author:** ![LiveForexSignals](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/liveforexsignals/32/1905_2.png) [@LiveForexSignals](https://forums.collective2.com/u/LiveForexSignals)\ **Post date:** [April 27, 2020, 11:07pm UTC](https://forums.collective2.com/t/finding-the-right-leverage-to-use-for-maximum-performance/13998/24 "2020-04-27T23:07:01Z")
> [@D\_Financial](#): > > But they have a lot to do with your original question of finding the right amount of leverage which I was attempting to address. The right (optimal) leverage can only be found via the backtest, there is no other way. In the Head/Tail example, the optimal move (leverage) is to risk exactly 25% of capital before throwing the coin. Any other leverage rapidly decreases the profitability of the system. Even worse, at 51% leverage we transform an otherwise winning game with a positive mathematical expectancy into a losing game. ---
**Author:** ![D\_Financial](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/d_financial/32/13320_2.png) [@D\_Financial](https://forums.collective2.com/u/D_Financial)\ **Post date:** [April 27, 2020, 11:09pm UTC](https://forums.collective2.com/t/finding-the-right-leverage-to-use-for-maximum-performance/13998/25 "2020-04-27T23:09:15Z")
I agree on backtesting as critical and should be a requirement for any strategy to be employed successfully. 🙂 ---
**Author:** ![LiveForexSignals](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/liveforexsignals/32/1905_2.png) [@LiveForexSignals](https://forums.collective2.com/u/LiveForexSignals)\ **Post date:** [April 27, 2020, 11:16pm UTC](https://forums.collective2.com/t/finding-the-right-leverage-to-use-for-maximum-performance/13998/26 "2020-04-27T23:16:14Z")
Well said. Leverage is also connected to the Risk of Ruin theory, a vast subject beyond the scope of this thread. Thanks again D\_Financial, nice conversation. ---
**Author:** ![DwightSchrute](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/dwightschrute/32/13547_2.png) [@DwightSchrute](https://forums.collective2.com/u/DwightSchrute)\ **Post date:** [April 28, 2020, 12:45am UTC](https://forums.collective2.com/t/finding-the-right-leverage-to-use-for-maximum-performance/13998/27 "2020-04-28T00:45:49Z")
Oh yeah sorry I didn’t realize that they were subs to a system. ---
**Author:** ![LiveForexSignals](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/liveforexsignals/32/1905_2.png) [@LiveForexSignals](https://forums.collective2.com/u/LiveForexSignals)\ **Post date:** [April 28, 2020, 1:33am UTC](https://forums.collective2.com/t/finding-the-right-leverage-to-use-for-maximum-performance/13998/28 "2020-04-28T01:33:52Z")
No problem at all Sir, after a while it becomes harder to keep track of who said what Lol [Previous page](https://forums.collective2.com/t/finding-the-right-leverage-to-use-for-maximum-performance/13998.md?page=1)