There's a relationship between four factors that many traders ignore: range, leverage, commission, and profit.
It's not theory. It's pure arithmetic. And if you don't understand it, you could be trading technically well but losing money without knowing why.
What is range?
In simple terms, it's the size of the move you expect. The space between your entry and exit.
• In a narrow range, there are few pips to catch.
• In a wide range, there's much more movement.
Ranges defines how much you can earn on a trade. But it's not the only factor.
The narrow range dilemma.
If the market is moving little and you want to make a decent profit, you need to use more leverage (5x, 10x, 20x, 50x...).
Problem: The higher the leverage, the higher the commission you pay (spread, financing, fees).
Result: You eat up potential profits in commissions. And if the trade fails, the commission hurts twice as much.
The (healthier) solution.
Trade in wide ranges.
Less leverage, but greater price movement. The commission is diluted across the larger price movement, and your net profit skyrockets.
The mental formula.
Net Profit = (Range × Leverage) – (Commission × Leverage)
• In a narrow range: Low range. To compensate, you increase leverage. But the commission increases with leverage. You end up working just to pay the commission.
• In a wide range: Wide range. You can decrease leverage. The commission decreases. You're left with more real profit.
Practical example.
Scenario A (Narrow Range + High Leverage):
• Expected movement: 0.5%
• Leverage: 20x
• Gross profit: 10%
• Commission (for leverage and fees): 4%
• Net profit: 6%
Scenario B (Wide Range + Low Leverage):
• Expected movement: 3%
• Leverage: 5x
• Gross profit: 15%
• Commission (low, due to low leverage): 1%
• Net profit: 14%
The difference isn't the strategy. It's the efficiency.
Why is this important?
Most people only look at the chart and the potential profit, but they don't calculate the real cost of the trade.
The commission isn't a fixed expense. It's a variable that multiplies with the leverage.
Trading in narrow ranges with high leverage is like buying a single piece of candy and ending up paying the price of the entire store in shipping.
Conclusion.
It's not just about how much you make.
It's about how much it costs you to make it.
If you trade in narrow ranges, high leverage eats away at your profit in commissions.
If you trade in wide ranges, low leverage allows you to keep more than you earn.
The next time you enter a trade, ask yourself:
"Is the expected price movement worth what I'm going to pay in commissions?"
"The market doesn't just charge you when you lose. It also charges you when you win. The difference is how much it leaves on the table."
---
---
-------------------------------------------------------
If you enjoy reading my content, don't forget to leave a like and follow me.
Leave a comment... I'd love to hear your thoughts on this topic.
-------------------------------------------------------
Check out my other articles here:
Article 5: “The Day My Curve Broke (...and Why It’s My Greatest Victory)”
-------------------------------------------------------
Exchanges/Brokers I use (Sign up with this link to receive bonuses in USDT):
Vantage: https://vigco.co/hp-com-inv/Buscador3s
Bitunix: https://www.bitunix.com/register?vipCode=BUSCADOR3S
WEEX: https://www.weex.com/es/register?vipCode=cubancrypt1
-------------------------------------------------------
Instant Funding Prop Firm:
Xiomex: https://app.xiomex.fund/register?ref=LY3up7
-------------------------------------------------------
Community CopyTrading: https://shre.ink/CopyTradingBUSCADOR3S--CubanCrypt
-------------------------------------------------------
My social networks:
Telegram: @luisstout
X (Twitter): https://x.com/LaRutadeSTOUT
Instagram: https://www.instagram.com/stout_trader
LinkedIn: https://www.linkedin.com/in/luis-yasiel-stout-hindz-80a4bab0/
Youtube: https://www.youtube.com/@BuscadoresdeLiquidez
-------------------------------------------------------
Donations for a coffee ☕
BTC: 3HTVy45MUjvYX1UVTNNDCr1Qngu2zqY4Ei
LTC: MTa2FMB7xmpRcPSMneSZevnCA4vvySEthm
SOL: 8e24YkrxaaWk8g1DHBq9ZNuwBaSBusnFN4YfTZAarWam
USDT (Solana): 3iiABP4wr7FzRtUAJKc1Afy8oRgCNud12qhre5vZNU9C
USDT (TRC20): TUhpooVyZndnQHGAjcJRFHHgvbRWsggZPP
---------------------------------------------------------
