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What is Leverage?

Discussion in 'Forex Training And Education' started by hasan87, Nov 7, 2013.

  1. hasan87

    hasan87 ECZ Newbie

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    Leverage is a financial tool that allows an individual to increase their market exposure to a point that exceeds their actual investment. For example, a trader goes long 10000 units of the USD/JPY, with $1,000 dollars of equity in their account.The USD/JPY trade is equivalent to controlling $10,000. Because the trade is 10 times larger than the equity in the trader’s account, the account is said to be leveraged 10 times or 10:1.

    If the trader bought 20,000 units of the USD/JPY, which is equivalent to $20,000, their account would have been leveraged 20:1.
    Leverage allows an individual to control larger trade sizes. Traders will use this tool as a way to magnify their returns. It’s imperative to stress, that losses are also magnified when leverage is used. Therefore, it is important to understand that leverage needs to be controlled.
     
  2. gerski

    gerski ECZ Newbie

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    Thanks for posting about leverage.Keep it up.
     
  3. imported_rrayne20009

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    Thanks for sharing the defintion of leverage in forex.Very educational to new and aspiring traders.
     
  4. uncle gober

    uncle gober ECZ Member

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    Thanks for the posting of leverage.

    Leverage is a by product of margin and allows an individual to control larger trade sizes. Traders will use this tool as a way to magnify their returns. It’s imperative to stress, that losses are also magnified when leverage is used. Therefore, it is important to understand that leverage needs to be controlled.

    I now use 1:500 in Armada Markets.
     
  5. sidejob

    sidejob ECZ Newbie

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    I means the use of high leverage is most preferably 1:1000, especially if your funds are limited as $ 1 - $ 50 but if the above is the highest 1:500 , only if you have about $100000 you can use 1:50 or lower.1:40 as the lowest leverage for trading, and never use 1:2 because this is not stock and this is forex.
     
  6. Erwinstreet

    Erwinstreet ECZ Newbie

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    Leverage in general terms simply means borrowed funds. Leverage is widely used not just to acquire physical assets like real estate or automobiles, but also to trade financial assets such as equities and foreign exchange (Forex).
     
  7. imported_rexway

    imported_rexway ECZ Newbie

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    leverage is simple the process by which the trader borrow the broker some permission to increase his margin to allow him enter many market when his equity is not up to task .this bring about more chance for earning and receiving the best
     
  8. uncle gober

    uncle gober ECZ Member

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    Using leverages can have extreme effects on your accounts if it is not used properly. Trading larger lot sizes through leverage can ratchet up your gains, but ultimately can lead to larger losses if a trade moves against you. do keep the leverage with good management
     
  9. aliforex

    aliforex ECZ Newbie

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    Right and we also must use leverage wisely when trading. We must know that forex trading is not easy as we think. If we want to get more maximal result, we must improve our trading skill and we also can learn from our trading experience.
     
  10. CahCuncun

    CahCuncun ECZ Newbie

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    We can use leverage for trading with small amount. And in TenkoFx, trader can start trading with $10. We can use leverage up to 1:500 in this broker. We also must remember that there will be risk that we should minimize to get more maximal result. Leverage should be used wisely.

    "Invite your friend, get $10 and win $5,000"
     
  11. Kinanthi

    Kinanthi ECZ Newbie

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    Leverage is the ratio between the amount of collateral and the borrowed funds allocated for trading. Example leverage: 1: 100, 1: 200, 1: 500. Leverage 1: 500, meaning that for a transaction that is done you should have a trading account with a broker in the amount of 500 times smaller than the number of transactions. in choosing the leverage we have to be careful because leverage can be beneficial or detrimental for our trading
     
  12. CahCuncun

    CahCuncun ECZ Newbie

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    Leverage from broker should be maximized as well as possible so we will get help for trading with small amount. I also just use leverage 1:500 for trading. I try to maximize this leverage as well as possible to get more maximal result in forex. Using 1:500 is also risky if we can not use it discipline when trading.

    Be more than a trader, be a TenkoTrader
     
  13. aliforex

    aliforex ECZ Newbie

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    Leverage is one of advantages in forex. Using leverage, trader can start trading with small amount. I also use leverage from InstaForex to start trading. We also must maximize leverage wisely, be discipline because leverage can be boomerang for us
     
  14. SmithMark

    SmithMark ECZ Member

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    In the case of forex, that money is usually borrowed from a broker. Forex trading does offer high leverage in the sense that for an initial margin requirement, a trader can build up - and control - a huge amount of money.
     
  15. CahCuncun

    CahCuncun ECZ Newbie

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    Yes, leverage can be used to maximized our fund which we use for trading. But we must know how to maximize leverage in a broker. If we can not maximize it, we will not get maximal result here. I just use 1:500 from TenkoFx. Using this leverage, i also try to be a discipline trader

    "Invite your friend, get $10 and win $5,000"
     
  16. Lotamondol

    Lotamondol ECZ Newbie

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    Leverage is an important financial tool that allows an investor to grow his market exposure to a level that exceeds the initial investment. In my trading life I always prefer to trade in a high lot so I have chosen MXTrade as my trading stag. This ECN trading platform supplied me 1:400 leverage. So I am able to trade in a lofty lot all time in spite of having a little balance.
     
  17. CahCuncun

    CahCuncun ECZ Newbie

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    Yes, leverage is very important for trader because without leverage, we need to make deposit in large amount. We must understand what is leverage for. Do not forget to make us be discipline although we get high leverage in a broker. In tenkoFx, i just use 1:500 for trading.

    "Bonus beyond the reasonable"
     
  18. Darren Maddy

    Darren Maddy ECZ Member

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    You are right CahCuncun, I believe without leverage support, it is impossible to work with low investment, so that’s why we need to have high leverage, as it helps to work well even with low capital. I am extremely fortunate with OctaFX broker, as they got 1:500 leverage that I use, but plus point is their 5 dollars minimum to start off, it is really cool and help us to perform well without facing much trouble or difficulty at all.
     
  19. Ernie Toshack

    Ernie Toshack ECZ Member

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    Darren, I also trade with OctaFX broker and like you said I am also pleased to use such high leverage while my favorite thing about them is their policy, it is so straight forward and honest that even if one joins without reading, it will never be any issue which make trading so much fun and enjoyable, it is obviously impossible without such freedom as they give and that’s why perhaps they are rated as number broker in Asia and amongst the best worldwide.
     
  20. Daneal Brown

    Daneal Brown ECZ Member

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    Leverage is considered as an important financial tool that allows an investor to grow his market exposure to a level that exceeds the initial investment. In my trading career, I have decided to trade in Trade12 trading broker due to having 1:400 leverage that always make sure profit instantly. By using this high leverage, I can trade in a high lot in spite of small balance.