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Leverage is the practice of investing a small amount of something in order to control a larger share of something else. In the Forex market, you have to leverage a small amount of money in order to make trades for a larger sum of money. In order to determine how much you can invest in a leveraged trade, multiply the amount of money you want to contribute to the deal by the first number in the leverage allowed by your broker. If you don't feel comfortable investing leveraged funds knowing that you will need to repay your broker if the market turns against you, then don't do so. When you apply for a credit card, you leverage your credit history, your reputation, in order to gain access to funds that you can use to purchase goods and services.

You start the process by applying for a margin trading account in the same manner that you might apply for a credit card. Imagine you open an account with a brokerage that requires a $1,000 margin and offers leverage of 100:1. In this example, the leverage offered is 100:1 and you have $1,000, so you would multiply 100 by 1,000 to determine that you can invest up to $100,000.
Moreover, please be advised that Forex trading is one of the most volatile investment forms in the world and all trades should be placed with full consideration of the risks and costs. Trading with a margin is high risk endeavour and not suitable for everyone, therefore, each investor should carefully consider all relevant trading conditions, such as experience, risk and cost, before taking part in any type of trading, including Forex.

Indeed, the currency exchange market is constantly changing and all CFDs (stocks, indexes, futures) and Forex prices are set by market makers. For example, if your broker trades in 100,000 currency units and the margin is 1%, you will need to deposit 1% of 100,000 into your account prior to making trades. You have the option of leveraging the trade, investing your $1,000 plus money fronted by your broker.

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27.11.2015 | Author: admin

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