Simplified mathematical scenario. Excludes costs, margin rules and position close-out. Not a suggested setting.
In this simplified example, 1,000 units of capital at 5× leverage create 5,000 of exposure. A 2% decline in that exposure means a loss of 100, or 10% of capital. The calculation excludes costs, maintenance margin and automatic close-out. Actual rules vary by product and contract; margin is not a universal loss limit.
Holding several assets does not mean their risks are independent. Companies in one sector may react together to rates, demand or news. Correlations can change during stress. Examine dependence on a single currency, sector or economic factor. Diversification can reduce concentration but cannot prevent market losses.
A plan records the hypothesis, time horizon, costs and what would make you reconsider. Set an exposure you can assess and monitor how it changes. Do not automatically increase a position to recover a loss. If you do not understand the product or cannot bear the adverse scenario, pause the decision and seek qualified guidance.
