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Knowledgebase: Forex Trading
What is leverage and how it is related to my trading account?
Posted by Jocille M on 08 May 2011 04:30 PM
  • In Forex trading, a small margin deposit can control a much larger total contract value. 
  • Leverage gives the trader the ability to make nice profits, and at the same time keep risk capital to a minimum.
  •  For example:

 Forex brokers offer 200 to 1 leverage,
which means that a $50 dollar margin deposit would enable a trader to buy or sell $10,000 worth of currencies.
Similarly, with $500 dollars, one could trade with $100,000 dollars and so on.
But leverage is a double-edged sword.
Without proper risk management, this high degree of leverage can lead to large losses as well as gains.


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