When you leverage, borrow in a margin to increase the size of their operation over the funds you have available in your account.
In stock and other securities, you can establish trading on margin in your account, which may allow you to double your purchase.
However, Forex is simply unprecedented double in most cases.
When we speak of leverage in Forex, we usually refer to one of ten to four times the balance of your account.
With Forex, brokers can offer this leverage extremely high because the market is so fluid that almost never have to worry because you owe them money if the transaction goes wrong.
The replacement policy called margin of many runners are designed to make a margin call to reset your account to happen long before any possibility of a negative balance.
However, some riders, if the market moves against your position too quickly could sustain a total loss of funds and may even result in a negative balance.
Therefore, it is advisable to check the policies of margin your broker to see if this could happen to you.
Considering the leverage, many brokers offer several options for the amount of leverage
If you start with, for example, with a 50:1 leverage, you can make a transaction worth fifty times the balance in your account.
So if you have a thousand dollars in your account can make a deal that is worth fifty thousand dollars.
If that seems extreme, just remember that some brokers offer leverage up to 400:1.
For this reason, you should never use money you need, the funds that you should be trading funds bear to lose.
It is important to be careful with leverage. A high leverage may seem wonderful, but it is highly risky for their funds.
A high position may result in total loss before your operation has a chance to move in favor of their position.
To avoid this, exercise sound money management.
We recommend that you never enter a position that uses more than ten percent of your available margin balance. This will give you a margin for fluctuations occurring in the market.
After all, is in Forex to make money, not lose it.
If you have any concerns about bank policies and how to manage your credit purchases, be sure to talk with your Forex broker and clarify any questions you have before risking your money.
