In this article, we will talk about such an overly important concept, which is the "forex leverage". Without getting to know him, you can’t not only reproduce your trade, but even really start it. Of course, we are talking about traders who do not want to invest significant amounts of personal money from the very beginning, or about those traders who simply do not have such funds. Each trader, starting his own work in the currency market, opens a personal account where this trade, in fact, will take place. When you open an account, it will be extremely important to choose the forex leverage. Because this particular thing can determine the risk, that is, make your trade either comfortable or risky. Let us analyze the concept of “forex leverage” in more detail.
So, in the beginning about definitions. What exactly is meant by the concept under discussion? Forex leverage is the ratio of the volume with which traders work to the total amount of funds that is on their account.
We give a concrete example. With a ratio of 1: 100 (one in a hundred), a trader has the opportunity to trade in the amount of ten thousand dollars if he has only one hundred dollars.
The values of the “P” leverage in forex trading can be completely different. For example, good brokers, as a rule, provide leverage in the intervals from 1:20 to about 1: 500. In reality, the risk increases with the size of the credit “P”. However, this is great for a trader who uses some aggressive type of trading, for example, scalping. The ratio of "one in a hundred" is considered the most optimal. In this case, the ratio of risk and profitability is as balanced as possible.
Close attention to the choice of leverage must be given to novice traders. Because the maximum allowable share of risk in a transaction is from one to three percent of the deposit. And the higher the leverage, the higher the risks of losing your deposit. Naturally, with a decrease in credit “P”, possible losses also decrease.
In the case when a person is just starting his work in the currency market, one should choose the “one in a hundred” ratio (1: 100), and then look at the results of his own trading. Incidentally, some brokers allow leverage changes already in open accounts. And in the absence of such an opportunity, you can simply start a second account.
Only after testing a personal trading system on a demo account, or on a small deposit, making sure that this system is profitable for a significant time period, it will be possible to increase the credit “P”. By the way, an intermediate option to increase the profitability of a growing deposit is to trade with increasing volumes.
After you read this article, you will understand that in fact “forex leverage” is the maximum allowable credit trait with which you will trade. The size of the loan depends on the size of “P”. It is also worth paying attention to the fact that quite often brokers raise margin requirements, with an increase in "P" (for example, a percentage increase in the level of "Margin call"). In short, the concepts of leverage on Forex and the volume of trading positions are closely related. They can allow both increasing and decreasing potential profitability, as well as risk. You need to use all this correctly and then your trade will improve, as well as personal psychological comfort. In addition, do not forget that the profitability of trading can be quite strong, depending on the broker you have chosen.
https://bizpro.htgetrid.com/bsn
