Bet Small, Big Win: The Forex Leverage

Investors use when trading in the Forex market almost always a major financial leverage. This is integrated into the trading platform. The principle of the lever is used in trade for a long time professional trading: the trader needs to open a position in the forex market is not inferior to the aggregate amount of the position by account balances, but only a fraction of it. Due to the virtually infinite liquidity of the Forex market can be very small fraction of this: According to brokers, investors should consider 0.25 to 2 percent by volume of the position account balances abdecken.Der financial leverage makes it possible to move large volumes with reasonable use.

An example: the investor must deposit with his broker forex 1 percent of the volume as a credit position, he can move with a stake of 100 €, 10,000 € in the market. Therefore already have an account balance of 1,000 € allows the establishment of a professional day trading approach. The profit possibilities are immense due to the effect of financial lever as well. Opened the investor is a position in the market and it sets a 100 € for a 100-fold leverage already a move leads to the extent of only one percent in the leveraged total position to a doubling of the use (1 percent of 10,000 is 100, which is being used in this example is equivalent).

It was at this point, however, stressed that the leverage can work both ways, and thus against the interests of the trader. A 100-fold leverage implies a total loss of equity if the market moves by one percent in the "wrong" direction. More than the amount the investor can not lose in the rule because the system software of the forex broker's trading platform, a loss that exceeds the account balance, prevented. With the opening of sub-accounts, it is possible to protect assets against losses on open positions.