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ForexTools
05-23-2011, 12:27 AM
Leverage in Forex

Leverage financed with credit, such as that purchased on a margin account is very common in Forex. A margined account is a leverageable account in which Forex can be purchased for a combination of cash or collateral depending what your brokers will accept.
The loan (leverage) in the margined account is collateralized by your initial margin (deposit), if the value of the trade (position) drops sufficiently, the broker will ask you to either put in more cash, or sell a portion of your position or even close your position.
Margin rules may be regulated in some countries, but margin requirements and interest vary among broker/dealers so always check with the company you are dealing with to ensure you understand their policy.
Up until this point you are probably wondering how a small investor can trade such large amounts of money (positions). The amount of leverage you use will depend on your broker and what you feel comfortable with. There was a time when it was difficult to find companies prepared to offer margined accounts but nowadays you can get leverage from a high as 1% with some brokers. This means you could control $100,000 with only $1,000.



http://www.actionforex.com/images/stories/contributors/sff/leverage.jpg


Typically the broker will have a minimum account size also known as account margin or initial margin e.g. $10,000. Once you have deposited your money you will then be able to trade. The broker will also stipulate how much they require per position (lot) traded.
In the example above for every $1,000 you have you can take a lot of $100,000 so if you have $5,000 they may allow you to trade up to $500,00 of forex.
The minimum security (Margin) for each lot will very from broker to broker. In the example above the broker required a one percent margin. This means that for every $100,000 traded the broker wanted $1,000 as security on the position.
Margin call is also something that you will have to be aware of. If for any reason the broker thinks that your position is in danger e.g. you have a position of $100,000 with a margin of one percent ($1,000) and your losses are approaching your margin ($1,000). He will call you and either ask you to deposit more money, or close your position to limit your risk and his risk.
If you are going to trade on a margin account it is imperative that you talk with your broker first to find out what their polices are on this type of accounts.
Variation Margin is also very important. Variation margin is the amount of profit or loss your account is showing on open positions.
Let's say you have just deposited $10,000 with your broker. You take 5 lots of USD/JPY, which is $500,000. To secure this the broker needs $5,000 (1%).
The trade goes bad and your losses equal $5001, your broker may do a margin call. The reason he may do a margin call is that even though you still have $4,999 in your account the broker needs that as security and allowing you to use it could endanger yourself and him.
Another way to look at it is this, if you have an account of $10,000 and you have a 1 lot ($100,000) position. That's $1,000 assuming a (1% margin) is no longer available for you to trade. The money still belongs to you but for the time you are margined the broker needs that as security.
Another point of note is that some brokers may require a higher margin during the weekends. This may take the form of 1% margin during the week and if you intend to hold the position over the weekend it may rise to 2% or higher. Also in the example we have used a 1% margin. This is by no means standard. I have seen as high as 0.5% and many between 3%-5% margin. It all depends on your broker.
There have been many discussions on the topic of margin and some argue that too much margin is dangerous. This is a point for the individual concerned. The important thing to remember as with all trading is that you thoroughly understand your broker's policies on the subject and you are comfortable with and understand your risk.

Master Forex IB
09-10-2013, 08:03 AM
leverage is very helpful feature that facilitate traders to do trading with low amount. They use less amount from their capital and trade lot in market.Leverage shpuld be treated wisely because it can eat your capital quickly if yo are not good in trading.

Maisie Barber
09-19-2013, 06:04 PM
Actually Leverage or margin loan means how many times maximum loan will give you your forex broker on your capital.

Amelia Price
09-28-2013, 09:03 PM
I think Leverage or margin loan means how much times maximum loan will give you your forex broker on your capital.

tonyaja
10-07-2013, 10:48 AM
Hmm...
Why do some brokers give huge leverage until 1:1000??
its so huge, and its bad for them..
can anyone here explain it??

HundEr
06-18-2015, 08:41 AM
Hmm...
Why do some brokers give huge leverage until 1:1000??
its so huge, and its bad for them..
can anyone here explain it??

They do that to attract as many customers as they can. There are lots of brokers at the moment and they should compete.

babushkafx
07-09-2015, 09:47 AM
I use 1: 500 leverage on my Hotforex account but manage risks using low lots in trading. Sometimes we need high leverage that's why this buying power potential should be always at hand.

vic84
07-10-2015, 05:10 PM
They do that to attract as many customers as they can. There are lots of brokers at the moment and they should compete.

Yes leverages are very luring for traders specially new ones, you should take utmost care while using leverages and when you use it, you should be very sure of placing trade.

vincom
07-22-2015, 04:17 PM
There are two kind of trader use high leverages:
- New trader, they think they can make hundred percent of profit.
- Scaplper

I am trading with an advanced account at leverage 1:400 and trade around 0.1-0.2, consitent profit and safety are my styles.

orni308
08-02-2015, 04:56 PM
there are many traders who go for leverages , but when you try to cash in high leverages you should have good experience, dont follow, just trade according to skills.

TigerFX
08-27-2015, 04:30 AM
Leverage is necessary for retail traders for trading in forex market. Without the use of leverage traders with little capital cannot trade. So keep the leverage at a control level so that you won't face too bigger loss.

bulalakaw
08-28-2015, 08:57 AM
what leverage do you guys use as of now?

HundEr
08-30-2015, 06:26 AM
what leverage do you guys use as of now?

I use 1:200 on FreshForex ECN account and I believe that it is the best option for scalping. Such a low leverage helps to control my funds and don't lose them all during exciting trading.

HoneyLilly
09-01-2015, 06:35 AM
what leverage is better for the funds of 100 baks? im a novice and still scared of real trading...:o

HundEr
09-07-2015, 02:17 PM
what leverage is better for the funds of 100 baks? im a novice and still scared of real trading...:o

A leverage for such deposit varies from 1:1000 to 1:1500 I guess. I know that at FreshForex it is 1:1000 for deposit up to $2000.

vincom
09-08-2015, 04:21 PM
My broker offer 1:200 - 1:500 leverage at here: https://www.vinsonfinancials.com/en/account-types , I think 1:200 is quite enough for me (I don't trade large volume and the fund is affordable)

HoneyLilly
09-09-2015, 05:22 AM
no way to trade without a leverage... once my dad tried. he doesnt want to sell his car again any more lol

Abu Boccor
09-09-2015, 06:13 AM
Leverage is an important financial tool that allows an investor to grow his market exposure to a level that exceeds the initial investment. In my trading career, from my first day of trading, I have been using 1:400 high leverage for making profit instantly. And, I am very lucky to select Mxtrade as my trading platform where for all times; I am able to trade in a high leverage with narrowest trading spread.

HoneyLilly
09-11-2015, 06:30 AM
A leverage for such deposit varies from 1:1000 to 1:1500 I guess. I know that at FreshForex it is 1:1000 for deposit up to $2000.
thanks 4 the answer)
oh that is too much to me)

Abu Boccor
09-15-2015, 03:44 AM
Actually, leverage is considered as an important financial tool that allows an investor to grow his market exposure to a level which exceeds the initial investment. In my trading career, I at all times like to trade in a high leverage for making profit instantly. That?s why; I have selected MXTrade as my trading platform where I am getting 1:400 leverage for all time with narrowest trading spread.

vincom
09-15-2015, 03:31 PM
My advanced account has maximum leverage 1:200, the broker Vinson Financials also offer another account types could have 1:500 leverage. But I only trade slight volume so 1:200 on advanced is pretty enough.

tuster
09-25-2015, 08:32 AM
I think the leverage is not as important, I used to trade on TeleTrade with the leverage 50 and 1000 and lost in all cases.

Larius
10-17-2015, 10:01 AM
Comfortable leverage for traing is 1:400, i trade with ECN account from liteforex, they heve thae same leverage for ECN accounts

Abu Boccor
10-20-2015, 04:17 AM
We the traders especially the newcomers are willing to trade in a high leverage for making profit instantly. But, practically, by using high leverage, it is not possible to make profit constancy. That?s why, I at all times use 1:100 leverage for avoiding risk, even though, I got 1:400 leverage from my trading platform MXTrade. But, in my demo trading, I took high leverage to see the performance how it works.

Abu Boccor
10-27-2015, 07:57 AM
In my trading career, I have seen most of the Forex trades are prefer to trade in a high leverage especially the beginners. As a result, maximum fall a great victim and sometimes lost their whole balance. But, I always like to trade in a small leverage for avoiding risk, although I got 1:400 leverage in my trading platform MXTrade. But, in my demo account, I took a high leverage to see, how it works.

Larius
12-01-2015, 07:45 PM
i use webtrader from liteforex it is working very fast

Ao hao
12-02-2015, 08:42 AM
Normally I think 1:100 is a good leverage for most traders, especially for new ones. More than 1:100 will be harmful for trading mind and you will take some unreasonable trading measure.

number1
12-03-2015, 07:36 AM
Some brokers offer 1:2000 leverage (exness) and 1:1000 (hotforex), but I think 1:200 is quite enough for me. You can earn less but you cannot let your account explode.

Abu Boccor
12-07-2015, 06:51 AM
Leverage is one of the most important financial elements which an investor should consider when choosing a trading broker. I have chosen MXTrade trading broker up to leverage 1:400. By means of this high leverage, I am able to trade in a high lot in spite of small balance. so, my trading life is very much profitable.

bulalakaw
12-11-2015, 07:55 AM
who said leverage is not important! It is one factor that all traders should be wary of, never be little leverage, I trade at hotforex on a leverage of 1:400 but even plan to make it lower, with such leverage my lot size is almost never more than 0.5 for risk reduction, make sure you have a decent RR ratio, if unsure then dont go over 10% of your account per trade, play it safe, never gamble

Umar Khalifa
12-16-2015, 08:04 AM
Leverage is considered as an important financial element to choose a trading broker. For making profit very rapidly I for all time like to trade in a high leverage. So, I have chosen Trade12 as my trading platform where I am getting 1:400 leverage to trade permanently. By means of this high leverage, I am able to trade in a high lot in spite of having small balance.

tuster
12-18-2015, 09:25 AM
And in addition, I can say that last year I've been trading with freshforex with the leverage 1:100 and still have a statisfied and regular profit and do not even understand why you need the other leverage.

Umar Khalifa
01-22-2016, 09:16 AM
There are two kind of trader use high leverages:
- New trader, they think they can make hundred percent of profit.
- Scaplper

I am trading with an advanced account at leverage 1:400 and trade around 0.1-0.2, consitent profit and safety are my styles.

Due to having up to leverage 1:400 I have chosen Trade12 trading broker.

Abu Boccor
01-25-2016, 08:50 AM
Practically, for making profit very rapidly we the traders are extremely dependable on high leverage. in my trading career, for avoiding risk I always like to trade in a small leverage in spite of having 1:400 leverage that make sure my trading broker MXTrade at all times. But, in my demo trading I took high leverage to see the performance how it works.

bulalakaw
01-27-2016, 06:14 AM
a couple of months i think i saw a broker offering a 1:3000 leverage, now thats something to run away from LOL. can be scary, but yeah stick to anything under 1:500 is the ideal leverage for small accounts, larger account with are better off with leverage of 1:50

Sohrab Rustom
02-12-2016, 01:27 PM
Leverage is the service why Forex trading business is the number one business in the world! Before, there were few trading broker without good leverage then retail traders were not available. Not now, we retail traders are very happy to get big trading leverage service. In my real account I get 1:400 trading leverage facility from regulated broker TradingBanks.

Hilry Canes
02-14-2016, 11:37 PM
Leverage is the reason behind Forex’s popularity, if you remove the high leverages then it just kills the excitement and this business will become pretty ordinary. I believe this is why right broker is so crucial and that’s why I select OctaFX only, they got huge leverage flexibility which goes up to 1.500, it has helped me a lot given I could start with low amount and yet get pleasure of high investment, it really makes me feel better as a trader.

Abu Boccor
02-16-2016, 03:23 AM
According to my trading experience, I think leverage is an important financial tool that allows an investor to grow his market exposure to a level that exceeds the initial investment. in my trading career, for avoiding risk I like to trade in a small leverage in spite of having 1:400 leverage that always make sure my trading broker MXTrade.

Annette Ashley
03-05-2016, 03:43 AM
Leverage plays a significant role in deciding success for us especially in early part of our career, if we want to succeed then we got to be good at taking advantage of high leverage, I get chance to work with massive leverage which is up to 1.500, it really makes my low investment work highly and helps me make serious profits without any difficulty at all, it is provided by OctaFX broker which is a seriously reputed name in the industry.

Abu Boccor
03-25-2016, 06:49 AM
I have seen according to my trading experience that by and large traders in particularly the newcomers fall a great loss by taking high leverage. in my trading career, I always like to trade in a small leverage I spite of having up to leverage 1:400 that always make sure my trading broker MXTrade. but, in my demo trading I took high leverage to see the performance how it works.

gamechanger
03-26-2016, 11:15 AM
Hmm...
Why do some brokers give huge leverage until 1:1000??
its so huge, and its bad for them..
can anyone here explain it??
I think they just want to attract clients to thems. By the way, the leverage 1000:1, is very small, broker such as FXglory offer a high leverage of up 3000:1: Although I have a feeling such a high leverage is very risky!

Umar Khalifa
04-05-2016, 11:43 AM
By and large traders in particularly the newcomers fall a great loss by taking high leverage. In my trading career, for avoiding loss I always like to trade in a small leverage. But, in my demo trading I took high leverage to see the performance how it works. Actually, leverage is considered as an important financial tool to choose a trading broker.

Abu Boccor
04-11-2016, 08:42 AM
The leverage is considered as an important financial tool that allows an investor to grow his market exposure to a level that exceeds the initial investment. In order to my trading experience , I think , before trading with high leverage, we the traders actually first of all have to acquire proper risk management policy which is very supportive to avoid loss with certainly.

felix
09-07-2016, 09:04 AM
Some brokers offer 1:2000 leverage (exness) and 1:1000 (hotforex), but I think 1:200 is quite enough for me. You can earn less but you cannot let your account explode.

Exness offers awful leverage. They recently dropped the leverage to 1:200. I wouldn't trade with a broker like that.

Abu Boccor
09-09-2016, 06:33 AM
By and large traders fall a great loss by taking high leverage due to non-sense discipline and zero risk management policy. For avoiding risk, I always use 1:100 leverage in spite of having up to leverage 1:400 that always make sure my trading broker MXTrade. But, in my demo trading I took high leverage to see the performance how it works.

Women Spin
09-15-2016, 04:55 AM
Leverage is something which is more related to learning topic, If a newbie trade with high leverage then he is not having any profit with it because lack of experience. Experienced trader can handle a trade with high leverage so do not take risk if you dont know how to trade with it.

Abu Boccor
09-21-2016, 09:30 AM
Leverage is considered as an important financial tool that allows an investor to grow his market exposure to a level that exceeds the initial investment. We the traders actually have to acquire proper risk management t policy before trading with high leverage. Actually, by and lager traders in particularly the newcomers fall a great loss by taking high leverage.