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March 17, 2018

Question:What is Leverage? How does it work while trading Forex?

Answer:

Leverage is the sum of borrowed capital used to increase liquidity and potential for return opportunities.

Trading on leveraged capital means that you can trade in amounts significantly higher than the balance of your funds, which means your balance only serves as the margin.

Heightened leverage can significantly increase your potential returns, but it can also increase chances of risk and loss.

Leverage is presented as a ratio, such as 200:1. This means that you can trade amounts 200 times higher than the sum of funds available in your account.

For example: if you have $1,000 in your account, it means that you can now open trades worth $200,000.

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