Purpose Of, Some Facts Leverage

Leverage and profit are closely linked to each other. Profit is the collateral to an account. In simple terms, it is like a loan that a broker extends to traders as well as this account would be settled by the Forex broker everyday. Assuming that margin on an account is $ 1,000 and leverage is 50: 1, maximum number of currency positions that can be opened is $ 50,000 (50 X$ 1,000).

Leverage positions should be modified whenever one wants to, because different situations call for different leverage positions, and excellent foreign exchange market companies agree with these. Prior to making operations one should receive informed with the risks to which they link. Unwise use of leverage can be parallelled to borrowing cash over one' s skill to pay. Properly used, leverage does provide potential for growth; however, leverage can just like easily intensify losses.


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