What is Leverage Brokerage firms want to help you make larger bets with smaller amounts of money, and thats when Leverage comes in. So using if you are trading with the EUR/USD pair and you believe the EUR will become much stronger than the USD, and you would bet 100.000 EUR on it, however you cant afford this amount, the broker will lend you the 100.000 EUR. You only pay 1000 EUR as a collateral deposit. You can buy up to 400 times the amount of your initial deposit through leverage. So if you place 1.000 EUR of your own money you can place a bet between 1.000 to 400.000 euro depending on the leverage you choose. If your deposit is 1.000 and your bet is 1.000 then you are using a leverage ratio of 1:1. If you want to bet 50.000 EUR with a deposit of 1.000 EUR then your leverage ratio is 50:1. This lending however does not happen for free, and you are charged by the broker according to interest rates. The term lots is used to describe the amount of the bet. A 1.000 EUR bet is a micro Lot, a 10.000 EUR bet is a mini Lot, and a 100.000 EUR bet is a Standard lot, so if you go long on a mini lot of the EUR/USD pair you are betting 10.000 EUR. The initial deposit can be from 1 to 100 times smaller than the actual bet depending on the leverage. FxNet Team FxNet Ltd is a global, fully licensed Over the Counter (OTC) online Forex and commodities broker, regulated by the Cyprus Securities and Exchange Commission (CySEC). FxNet is located in Limassol Cyprus. FxNets mission is to reach and retain traders around the globe through exceptional customer service, integrity and continuous innovation that will provide our clients with simple, exciting and secured trading platforms. fxnet/news/what-is-leverage
Posted on: Tue, 21 Jan 2014 16:33:09 +0000
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