Leverage in forex
The leverage is the controlling back given to you by your broker to control bigger amounts in the forex market. For instance, if you make a deposit of $50 and you get a 1:50 leverage, this means that you can control $2500 with just that $50 you have. The more leverage your broker offers, the better chances of making more money in the market. Some brokers like Profiforex offers leverage of up to 1:500.
Leverage is one of the advantage of trading in forex. Leverage can make your returns be much more greater than your initial deposit. But leverage can be a double edge sword too. So there is need to exercise caution.
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The number one thing that hangs most traders out to dry is the ability to be able to use forex leverages so as to execute your forex transactions via a leveraged account. Using leverage allows traders to trade on the market with more money than what they actually have in their account. For example, if you were trading 2:1, you could use a $1000 deposit, to control $2000 of currency on the market. Many brokers in the forex offer as much as 50:1 leverage. New traders tend to jump in and start trading with that 50:1 leverage immediately without being prepared for the consequences. But traders should watch carefully when ,aking such choices.