What Is Leverage? | FXTM Learn Forex in 60 Seconds

Leverage is a “loan” provided to the investor by the broker and is expressed in the form of a ratio. Here are some levels of leverage provided by FXTM depending on the Client’s knowledge and experience. But what do these ratios mean exactly? Let’s look at some examples! Say a trader has a capital of €10,000 and is trading with 1:100 leverage. Since his leverage is 1:100, he has a trading capital of 1 million Euros If he decides to buy the EURUSD at 1.3055 and closes his position at 1.3155… …he will almost double his capital! Here’s another example of the same trader, but with a different outcome. This time, the trader buys the EURUSD at 1.3055 but closes his position at 1.3005… …and almost loses half his capital! So it’s important to remember that leverage increases your trading capital, providing opportunities for multiplied profits. But it can also multiply your losses too! So use leverage wisely!


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