Author: Editorial Team

ForexPromos Editorial Team is comprised of a selection of hand picked editors that bring you the latest breaking news from the financial markets. We also provide forex educative articles as well as comprehensive fx broker reviews.

Forex leverage explained

Trading Articles
First of all, the word leverage comes from lever. A lever is a simple machine that makes work easier for use; it involves moving a load around a pivot using a force. In other words, lever is a small push given in order to produce bigger impact. Most new traders would notice that forex brokers mention leverage of 50:1, 100:1, 200:1 Leverage is a ratio of amount used in a transaction to the required deposit; a 100:1 leverage means that you can trade $100,000 in currencies with only a $1,000 deposit. If a broker offers you a 100:1 leverage on your $1,000 and you decide to trade a position worth $100,000, that means that you are borrowing $99,000 from your broker (you shell out $1,000). Your trade will be closed (margin call) as soon as your position losses 1% which is the total amount ...