Forex Leverage

Fortunes are made and lost on the forex market every day, it’s the only place in the world where the action is so frenetic and the traded volume so large, that you can turn millionaire overnight, or in the case of George Soros and his attack on the pound, billionaire overnight. The forex market makes all other markets pale in comparison, it’s 50 times larger than the stock market and 15 times larger than the bond market. The number of forex traders keep growing too as brokers promote their services too an ever growing audience over the internet. Unlike stock and bonds which have plummeted in value over the recent years and wiped out savings, the forex market is a continuous source of profit and can never turn unprofitable because of it’s nature. The forex market offers the opportunity for profit in both good and bad times.

This article is about the unique aspect of forex leverage, which is the main reason why so many traders are looking to get into forex trading. Imagine if you talked to your bank about buying a few stocks or bonds and the bank offered you 100 times more stock at no additional cost. Unthinkable I know, but in forex trading, that’s actually reality. Leverage is trading with money that you borrow in the market. With leverage you can trade for hundreds of times more than what is actually in your account. The only thing you need is to meet margin payments on the total amount. Leverage lets you trade for $100,000, $200,000 or even more for just $1000 in your account. That’s a lot to throw around and that’s why forex trading is the only market where riches can be made so fast.

Leverage holds some risks though, it’s great to have leverage when you win your trades, but what happens when you lose? Since you gear your trades, you will receive profits hundreds of times larger than your deposit, but you will also risk losing hundreds times faster. The good thing is that you can never lose more than what you have in your account, so you don’t risk going into debt. The bad thing is, that your broker will cut off your account by demanding margin payments faster. If you don’t have this money, then they will simply close your account. Still it’s not the worst trade off in the world: You can make hundreds of times in profits, but you can never lose more than you deposited. That’s a good deal by all accounts.

Forex leverage levels shouldn’t be the only reason for getting into forex trading, though it’s easy to see how it can appeal to many people who are tired of being told to wait 10-20-30 years for a return on their investments. If you feel this way and is comfortable with risking your deposit, then leveraging your forex trades could be just the thing you want. Check out some brokers and see what levels they offer. Some only offer 100 times while others offer up to 400 times.