Sumary of What is Leverage in Forex? Forex Leverage Explained:
- 24, 2021Many people are attracted to forex trading due to the amount of leverage that brokers provide.
- Leverage allows traders to gain more exposure in financial markets than what they are required to pay for.
- Traders of all levels should have a solid grasp of what forex leverage is and how to use it responsibly.
- This article explains forex leverage in depth, including how it differs to leverage in stocks, and the importance of risk management.
- Leverage in forex is a useful financial tool that allows traders to increase their market exposure beyond the initial investment (deposit).
- This means a trader can enter a position for $10,000 worth of currency and only need $1000, in a ten-to-one leverage scenario.
- However, it is essential to know that gains AND losses are magnified with the use of leverage.
- In adverse market scenarios, a trader using leverage might even lose more money than they have as deposit.