What is the leverage?……

hi, friends today i will share about leverage of forex trade …..

What is the leverage?

Leverage is a loan provided to an investor in order to trade huge amounts of foreign exchange currency. If for example an investor is trading with a leverage of 1:100, he has the opportunity to trade $1,000 by making use of only $10 of his own funds. In essence, the investor has made a use of a loan amounting to $990 i.e 99% of the total value required for a trade of $1,000. It is usual for forex brokers to charge interest on the borrowed amount. However Agea does not charge any interest.
An investor can profit in the forex market by the use of leverage but on the other hand leverage can work against investors. If the currency underlying a trade moves in the expected direction then investors will make much larger profits than they would have if they did not have any leverage but if the currency moves in the opposite direction then leverage will greatly amplify the potential losses. Forex brokers close out open trades as soon as the investors’ available balance reaches 0(zero), so you cannot lose more than the funds held in your forex account.

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