What is a leveraged trading ?
It's a question that any trader may ask himself / herself at the beginning.
It's one of the key advantages behind Forex trading.
Traders use leverage to increase the returns can be provided on an investment.
Leverage is actually a loan that is provided by brokers to traders (Investors).
The usual amount of leverage offered by brokers are 50:1, 100:1, 200:1 and 400:1.
Most brokers have set 100:1 as their default trading leverage.
Standard trading is done on 100,000 units of currency and called LOT.
When leverage is set to 100:1 an investor can trade 100,000 units with only
1000 units of funds.
Leverage is actually a double edged sword, it can bring a lot of profit to a trader,
or it can cause the trader loose his / her deposit quickly.
Trading on leverages over 100:1 is NOT recommended.
Happy Trading.
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