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Forex Stock Exchange Forum » Forex and Stock Trading English Forum » Forex School » What is leverage?

What is leverage?

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1attention What is leverage? Mon Aug 31, 2015 10:46 pm

SuperHero

SuperHero

Leverage is the effect of magnifying your purchasing power of a certain instrument in return for freezing an amount in your account called the required margin. Margin trading and the use of leverage allow you to trade with much higher volumes as opposed to trading on a cash to cash basis.   Note that margin trading is a double edged sword that can magnify both profits and losses.

SuperHero

SuperHero

Trading leveraged products means you are entering positions with much higher volumes than the amount available in your account. This offers you the unique opportunity to make more profits by investing fewer funds but you also run the risk of increased losses.  

To protect your account balance from the effects of the leveraged trading and increased market volatility, our trading interface includes a risk management system that will attempt to close out your positions once your equity reaches 50% of the required margin.   This greatly decreases the risk of losing more funds than you have deposited, however this can still occur especially in cases when an account is heavily burdened with open positions and the market is highly volatile.

3attention Re: What is leverage? Fri Dec 11, 2015 7:44 pm

Vlad

Vlad

If you are a beginner, it is better to take the lowest leverage when you register. If you are a professional player, then choose a higher leverage. It should be noted that some brokers prohibit to change the previously selected leverage after registration, so it should be taken into account when you register.

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