For a would-be trader or simply a beginner this is an enticing term. It is what attracts the individual to invest. High Leverage Forex is a glutton which can only be dealt with first-hand, by indulging into fx, by investing in it.
Why is forex high-leverage trading enticing?
By now, quite obviously you are hooked. What is so enticing and exciting about high leverage forex? To quench the suspense, you can participate in a trade worth a $1 million with as little as $2500. And your profit margin will be calculated as per the $1 million, not by your seemingly meager investment. Enticing enough?
You must be excited by now. And you might be thinking of opening a fx account too. But hold on for just a few minutes longer, these minutes might actually give you what you’re already dreaming about.
Frankly, you need to know about leverage to even comprehend how you might be gaining by such a huge extent.
In FX trading, this is what this term literally means. Any broker or brokerage firm will provide you different leverages according to which your investment will be traded upon.
This is expressed in ratios. So, a 50:1 leverage simply means that you can trade with an amount 50 times of your actual investment. But this is not all. In fx, your preliminary investment is known as your initial margin.
There are accounts which even provide for a 400:1 leverage. That is, with an investment of $1000, you can buy $400,000 worth of any other currency as per the currency pair against USD. This is high leverage forex.
Why is leverage offered in the first place?
If you are allowed to trade only with the invested amount; the probable profit is marginal compared to what a leveraged trade might garner. This is what you might be thinking. Well, you might be disappointed as now comes the business part.
- Margin-based – The ratio between the margin required and the total value of transaction.
- Real – The value of transaction and the total trading capital.
To you, both of these are important for key aspects of trading. Firstly, margin will help you compute the amount of money you will need to stay live in a specific trading position.
Secondly, and more importantly, you’ll need your real leverage to comprehend the amount of finances you’re investing into for the trade.
There’s no catch!
Name one thing seemingly brilliant thing that doesn’t have a catch to it. Even the forex trading highest leverage will not guarantee you a profit if the investment is on the wrong end of the market. The fx market needs to be studied into intuitively and anticipated for the profitable position to open up.
“Blind luck never works thrice.”
And most importantly; though luck favors the bold, it is better not to participate in a trade where you can lose more than you have. But, either way, high leverage forex is profitable. And there’s no point in not trying it out. Be brave and invest.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.