Wednesday, September 26, 2012

What is Forex leverage

What is Forex leverage

What is Forex leverageForex leverage is works just like real leverage. I takes your power(money) and multiplies it with some number. Forex Leverage multiplies your money with 20 to 400 times, this level depends on your forex company.
Some forex companies gives you leverage ability to 100 times. for example if you have 500$ and you want to buy foreign currency. when you used 100x leverage, your money becomes: 100x 500$ = 50000 $ . then you buy or sell some currency and make profit.
Downside of this technique is risk of lose money. If you lost money then your lose will multiplied with some number. Multiply number depends on what you want to buy or sell. forex company decides what number they can give you for your movement.
If you selling Japanese-Yen and Buying Us-Dollar. forex company looks your money(for ex.200$) and then looks the current position of US/YEN then gives you some leverage, maybe 150x times.
If you buying Canadian-Dollar and Selling Euro, and your money is around 800$ , then forex company decides to give you 350X times leverage multiplier.
Forex leverage depends on your stuation and current position of money.
Once you properly grasp the mechanics of forex leverage you can begin to practice forex trading online.

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Risk Warning

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial adviser if you have any doubts.