Leverage (Forex)

Ratio between the amount of money on the account (deposit) and offered funds. Trades in the FX market are performed in the range of tens of thousands (mini-lot accounts) or hundreds of thousands (standard lot accounts). Many traders cannot afford these amounts, so brokers offer to match the trader’s funds with a corresponding ratio of trading capital so that the trader can meet the obligation for the trade. These borrowed funds are provided by the broker is what is called leverage. The amount of leverage used depends on the ratio of the trader’s funds to the broker’s funds. For instance, the leverage minimum in the US is 1:50, meaning that for every $1,000 the broker can match the trader’s funds with $50,000.

By |2018-09-04T14:34:04+00:00September 4th, 2018|0 Comments

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