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Saturday, March 30, 2019

Using Leverage in Forex


Leverage one of the major parts of the forex trading system . It is a main reason why many people withdraw from forex trading at first stage only. It is a concept in which one can trade positions in excess to your capital investment. This means that you have a great chance of making big profit from this market. It should be clearly noticed that leverages works in two ways. First case you can earn lot of money by doing winning trades all the day and other side you can also lose money by using leverage. There are many traders in the market who have completely lost their account through single position and the reason behind this is they leveraged themselves a lot. Let us discuss here how leverage works while doing trade in forex system and why it is called dangerous.

If you look at the website of any forex broker company you can see that they have presented with many attractive offers regarding leverages. They have attracted customers with opening account with 1:400 leverage. These are the offers which are specially designed to attract only newbie’s in the market. They got attracted with such brokers because they can trade at large positions and they are risking their very small capital amount. The example which we have seen has offered 400 times of investment of their capital which means that if you have a capital of $1000 then you can play up to $400,000.

Finally, from this brokers are going to earn some benefits because they are very well aware that normally all forex traders are going to lose their money. In long run they are going to make some good profits because traders are going to over commit themselves in this case. There will be a small movement and it can result in large loss for these traders. Being a forex trader you should always take of such broker who offers such high leverages. Finally they are going to get some benefits not you. You should find some good company which can offer good quality and it should reliable during the busiest time of the trading days. They should offer you tight spread and completely licensed. These company should be governed by proper authorities as well. If this is followed then leverages should not be an issue at all.

Your final destination from this market is to earn money so you need to follow some good money management rules. Keeping tight stop loss and keeping a risk of small percentage of your trading capital on any trade is good planning of the game. This means that the losses which you may face are always small. So, you can keep yourself in this game for a longer period of time. Final thing which you should keep in mind is that you can make handsome amount of profit from forex market without the concern of leverage. There are positions which are high in leveraging but they are reserved for those who are into gambling. Finally, they are going to lose their money in this.

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