Start Learn Forex

What is the Leverage In forex?

Pinterest LinkedIn Tumblr

Leverage or margin loan is the maximum number of loans your capital broker will give you.

Suppose your balance or capital is $ 100. If you use 1; 200 leverage, your broker will give you a maximum loan of up to 200 times when you trade. Now it depends on how much you owe the loan. So, with 10 dollar you can trade 10×200 = 2000 dollars.

Well, if I get a loan up to 200 times, why not take it? The stock market does not want to give 1: 2 loans.

Suppose you make a deposit of $ 10, use the leverage, 1: 1, which means you will not take a loan. In that case, the broker will not allow you to open a large size trade. With that 10 dollar, as long as the big trade can be opened, it will allow you to open the trade. In that case, if the market moves 50 pips to suit you, you will probably earn $ 1. Typically, currency pairs move about 100-300 pips daily.

Profit/Loss in Leverage

So you thought, take out a loan and open a bigger trade so that the profits are higher. If a broker offers you 1: 200 leverage, you can trade 10 dollars with 2000 dollars if you wish. And so, the profit that was used before, will now be 200 times greater. Similarly, if you used the loss of leverage as a whole before, then the loss would be 200 times greater. If the market has previously move 50 pips in your favor, you would have earned $ 1, now you will have $ 200 profit.

The broker loan will give you exactly that. If your loss is equal to your capital at any time, then your trade will automatically be closed. In any case, the broker will not allow you to trade in excess of the capital that you have. This is called the margin call in Forex, the forced sale in the stock market of Bangladesh.

Brother, this is a terrible thing to say! If my loss is equal to capital gains by using more leverage, will I become a fad or not?

In straightforward Bengali words, yes! So, no matter what the leverage set, never open a trade larger than the balance of the trade opening. Some people say that forex or capitalization in one day is twice as good, three times as good. It is certainly possible to have luck. But if you trade with the threat, you will have to eat one day or one day

Write A Comment