Forex

What is leverage?

Leverage is a financial instrument that magnifies the purchasing power of a trader. For example, if you have $400 in your account, with a leverage of 100:1 you can purchase up to 40,000 Euro.

Why do you need leverage?

Prices on many financial instruments, including currencies, fluctuate every minute, sometimes even every second. However, often times such fluctuations are minuscule and its relatively rare for currency prices to make significant jumps or falls. This does not mean that you cannot speculate. Since leverage magnifies your purchasing power, it also magnifies profit and increases risk of loss.

Risk Factors

The more leverage you use, the more risk you take on. We recommend trading with a leverage of 20:1 and recommend using a higher leverage only if it is a part of your overall trading strategy or your trading system.