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  Latest
Make Money in Forex by Avoiding These Psychological Risks May 24, 2022
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Leverage

Mira Team by Mira Team
January 5, 2021
in Forex Terms
Reading Time: 1 min read
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Definition – What does Leverage mean?

Leverage is the ability of a forex trader to control large sums of a currency without posting an equivalent amount of capital. Essentially, a trader puts a small amount of capital down (margin) and borrows the rest to control the position. Leverage in the forex market is among the highest in the investing world, with 200:1 not uncommon. This means a trader can control 200 currency units for every unit of capital posted.

ForexTerms explains Leverage

Leverage allows a trader to increase the size of his trade many times over. With $1000 and 50 times leverage, a trader can control $50,000 worth of currency. This means any gain or loss is also magnified by the same amount. Leverage can be a double-edged sword for traders in that it is great for turning profitable trades into very profitable trades, but quickly burns up an account if the trend turns against the position.

ⓘ Mira FX is not liable for any damage or loss, including but not limited to, any loss of investment, which may be based either directly orindirectly on the use of or reliance on such information. Before deciding whether or not to take part in foreign exchange or financial markets or any other type of financial instrument, please carefully consider your investment objectives, level of experience and risk appetite.

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