Home / Videos / What Is Leverage? Forex Leverage Explained – Forex Trading…
1595000561_hqdefault.jpg

What Is Leverage? Forex Leverage Explained – Forex Trading…



http://goo.gl/bRKoqt – Click Link To Open A Free eToro Forex Account.
https://www.casinoeurope.club – Best Online Casinos For The Europe Market.

What is leverage in Forex trading?

Traders in Forex trade a contract of currency exchange rates. As the movement of currency rates can be very small, traders use leverage to increase their profit potential.

Here is a step-by-step, practical example:

You decide to open a contract for trade and it has these elements in it:
The currency pair for trading — e.g. EUR/USD
The direction of the trade — BUY euro and SELL US dollars
The price — say 1.3500
The contract value — EUR 100,000

As the trader, you purchase this contract, believing you will profit once you close (offset) the contract.
If you are right (for example: the rate increased to 1.3600), then you would profit: for every euro in this contract you made profit of 1 US cent. In total, the profit would be $1,000 (100,000 x 1 cent).

However, do you need ALL the EUR 100,000 to open this contract?

The answer is: NO. You can LEVERAGE the trading: the trader is required to risk, for example, only 1:100 of the contract value. Accordingly, for a contract of 100,000 only $1,000 is needed. However, if there was loss, and the value of the WHOLE contact dropped to 99,000, then the deal is automatically closed, since the “guarantee” made by the trader was only $1,000.

With leverage, you have more money to use for trading than the balance in your account because you can ‘leverage” what you do have — that means you use what you have to increase the amount you can trade and to increase your profit when you succeed in trading in the right direction of a currency pair. On the other side, when there is a loss: the higher the leverage, the quicker you are subject to automatic closure of your deal.

source: easy-forex

http://www.pipsandspreads.com


source


About admin

Check Also

1711446984_maxresdefault.jpg

Basic Fundamental Analysis of All Companies Listed in Dhaka Stock…

“নতুনদের জন্য শেয়ার বাজার বিশ্লেষণ – Fundamental and Technical Analysis” বইটি সংগ্রহ করতে চাইলে নিম্নের ...

Leave a Reply

Your email address will not be published. Required fields are marked *

NFL Jerseys 2019