What is Leverage in Forex ?


In the finance world leverage has many different meanings. But the basic idea is to use a small sum of money you hold to acquire a greater amount of money (usually in the form of a loan). ForexYard offers its clients leverage up to 1:200. For example, let’s say you have recently opened a live account, and deposited the sum of $10,000. Using leverage, it will be possible for you to open new positions at the amount of $2,000,000! The first thing that might cross your mind is that you can profit 200 fold your deposit. Yet you should be aware that this 200 fold as well means you can lose your deposit just as rapidly. This is why Forexyard does not recommend using leverage higher than 10 times your balance. Using leverage exaggerates both gains and losses, even when market conditions are relatively calm. In the case where a trader surpasses the maximum leverage permitted (this happens when account equity shrinks as a result of trading losses), the trading system will close all effected positions in the account. This safeguard prevents a client’s account from falling into a negative balance, even in the highly volatile and fast moving forex market.

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