What does Leverage mean in FOREX?

Question

Example

1:10

1:20

1:30

1:40

1:50

Answer 1

Flamezz;

In Forex, when a currency is traded, a 1-100 is a $100,000.00 contract. If you trade at 1-200, now you are borrowing an extra $100,000.00 contract or doubling your risk. The same go in progression for 1-300, 1-400, 1-500.

The problem with increased leverage or borrowing more from the broke, if the trade turns against you, the more more account suffers. A balance of $2500.00 at 1-200 Leverage, and a trade of more than 2 lots, that goes against you, can wipe your account out in a small amount of time. On a News trade, it could only take minutes. If you don't have $2500.00 account balance and trade @ 2% of your balance, you can cut losses short. Big leverage is hard to control if the market moves fast.

Also, there are mini accounts where you can trade in CENTS

rather than dollars. Suggestion, never trade more than 1-100.

Most Brokers consider a $2500.00 account a MINI. Also you can find Brokers that offer less than 1-100 leverage.

Hope this helps.

Answer 2

learn more about forex in this site. deposit a minimum of $100 which you can also use to trade later, and you get to talk live via email, chat or telephone, to an expert forex trader called your personal Account Service Manager (ASM).  you can then take this opportunity to ask everything you want to know about forex.  your ASM will be your best resource person and he will even trade along with you so that you will get to familiarize yourself about how the real trade is done and give you the tips and tricks you need to know and do to achieve a profitable forex dealing.

Answer 3

The first post is a good explanation about leverage. Be sure you also understand margin too. It's not the same as in stocks, and margin is a vital part of leverage.  Article below details it.

Answer 4

Leverage is used to trade the forex market’s day to day very small movements. Finexo's sophisticated trading platform enables a yield of profits from a relatively small amount: an initial investment of $100 at a 200:1 leverage, generates yields from an amount of $20,000. With leverage, a .5% rise in the rate of a currency turns to a profit of 100% on your initial deposit amount!

Nonetheless, leveraged trading entails risks; therefore, traders should take everything into consideration. On the other hand, on the Finexo platform traders  cannot lose an amount greater than the total funds in the account.