What is a leverage


In this article, you will learn what leverage is, why you should use it in Forex Trading and FBS as your broker.

Leverage is an indicator of the ratio of own funds to borrowed funds. Borrowed money is provided by a broker for transactions. Essentially, this is a free loan, which is based on the indicator of a trader’s deposit. The leverage size can range from 1:1 to 1:3000.

For example, when you use leverage 1:100 you need to provide only 1% of the amount. Forex lare generally quite large in size. The minimum size of a position is 0.01 lot. For the EUR/USD currency pair it counts for 1000 euro. Not everyone is ready to spend such an amount of money from the start. Therefore, brokers provide an opportunity to use leverage.

A specific example of how it works. You want to trade 1 lot of USD/CAD. You provide $100,000 of your own money and make the deal. If you do not have such an amount or you are not ready to spend such amounts, you can use leverage. If you use leverage 1:1000 when trading 1 lot, you will need to provide $100, not $100,000.

There are several reasons why traders use forex leverage. These include:

1. Allows you to engage in trading without having huge amounts of money.

2. Allows you to get big profits in a short time.

3. Forex leverage can bring big profits if used correctly.

The bigger the leverage, the more money you get every time the price changes in your favor. But also the bigger the leverage, the more you lose every time the price moves against your favor. You should be careful when choosing leverage. The most common leverage for Forex traders is 1:100.

Which leverage to choose

It is worth choosing the level of leverage that will allow you to feel most comfortable. For example, FBS offers leverage from 1:50 to 1:3000. The larger the leverage, the larger volumes the client can trade. Investors with a small deposit prefer margin trading. That is, trading using leverage, since such investors do not have enough deposits to open large positions. As already mentioned, the most popular and optimal leverage in Forex is 1:100.

What is the problem with high leverage? The problem is that newcomers, using big leverage in pursuit of big profits, ignore potential risks. The risks are that an inexperienced trader is more likely to lose huge amounts of money or. At best, most newcomers make as much as they lost. Therefore, in the case of using leverage and trading in general, it is necessary to study a large amount of information.

Why Choose FBS

The choice of a broker directly affects the level of leverage available to you, but also the comfort of all trading in general. One of the non-obvious security guarantees is the official cooperation of FBS with Leicester FC and Barcelona FC.

If you do not have enough experience or theoretical knowledge, FBS can provide you with a completely free training course. This will take you from a Beginner to an Expert in trading by providing the necessary knowledge. But learning is always good, so check out tutorials on other trusted resources as well.

A special news feed available on the FBS site is also an advantage. Which, with proper knowledge and experience, will allow you to predict the impact of certain events and allow you to earn even more.

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