Full investment in Forex with no leverage vs partial investment with high leverage

External question — Personal Finance Stack Exchange Author: null_pointer Original post: https://money.stackexchange.com/questions/134757 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Assume two investors with $100,000 each, willing to invest them in Forex as scalp. Investor (a) Funds a brokerage account with the full $100,000 each trade is executed with the full $100,000. trades with no leverage set a stop-loss to 1% of the investment ($1,000) per trade Investor (b) Keeps $99,000 safe in his/her bank account. Funds the brokerage account with only $1,000 each trade is executed with the full $1,000 trades with 1:100 leverage (just trade broker leverage, not banking) doesn't place any stop loss Both investors execute the same trades. Are these two strategies effectively the same in terms of risk and expected financial outcome? Will both get to the same final outcome? Is option (b) safer and therefore recommended to maximize benefit while minimizing risk or does it have any flaw in the logic?

External answer — Personal Finance Stack Exchange Author: TomTom Original post: https://money.stackexchange.com/a/134758 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Are these two strategies effectively the same in terms of risk and expected financial outcome? Nope. Investor B will have a different outcome - plus or minus - because he will have to pay (or get) interest rate for the leveraged amount. Over longer sideways market this may make a difference that is nontrivial. That basically is the difference. 2nd investor basically has to borrow the position funds and that can cost (or get) some money.