Global Transition : Forex Trading News

6Apr/120

Understanding Forex Leverage

One of the best things about trading foreign exchange is that you are able to leverage your account.  Leveraging means that you are able to invest a larger amount in a currency than you have in your account. 

By being able to leverage your trading, you will make a greater profit for every currency pair that goes up in your favour.  For example, if you leverage your account by a factor of ten, you are effectively putting ten times as much money into a trade and therefore can make ten times the profit.  Of course, the downside of using leverage is that your risks are also increased.  Leverage is particularly useful if the market is trading slowly as you can still make large profits from small changes in a currency’s value.

Looking at reviews of different companies will give you an idea of how much they allow you to leverage your account by.  For example, CitiFX Pro guides state that you can leverage your account by 50:1 - meaning for every £1 in your account, you can trade £50 on the market.

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