Tag: forex leverage

Forex 101: Understanding Leverage and Margin

Trading Articles
For any forex trader, it is essential to understand two concepts: leverage and margin. Leverage lets traders to into currency trading using an amount that is actually more than what is available in their respective accounts. With this, forex traders have the chance to have “bloated” funds. Meanwhile, margin refers to the actual funds needed for a trading account to be considered as collateral that is necessary to cover potential losses. A closer look into leverage Compared to the stock market, traders within a forex market are more vulnerable to losses. Fortunately, forex trading promises higher profits, but the risks remain high. Most brokers allow a leverage of 100:1. It means one can buy or sell €100,000 worth of currencies. This is possible even if you have only around €1,000 worth o

Understanding Forex Margin Trading

Trading Articles
Forex Margin Trading is likely one of the fairest and essentially the most compelling investment method available in the forex markets. Forex Margin trading refers back to the leverage quantity given to the traders to trade available in the market. Forex margin trading can be a thought of a forex trader who borrows money from the Forex brokerage firm with a purpose to utilize the dollars specially for trading the Forex markets. Because of forex margin trading, a trader with only a modest capital is able to put money into significantly bigger value contracts. This is also some other term for leverage. The financing proportion in forex margin trading is above 20 times, because of this the Forex traders’ funds may enlarge to twenty times to carry on the trading. Some brokers offer you a le

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 ...