FOREX Market Leverage

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кредитное-плечо-на-рынук-FOREX Leverage is a loaned amount of money or, in other words, an interest-free loan of certain duration that a brokerage company provides to a market participant for trading Forex. The broker thus enables customers with relatively small amounts of capital to operate in the market on a par with hedge funds banks and other large market makers without having to invest on their These middleman services and the provision of leverage by the broker are what enable the trader to open an account Co and start trading in the real-world market with a deposit of just about 500-1000 dollars. Leverage is used every time you open a trade. So, in order to open a trade of 1 lot in volume in the currency pair EUR/USD, you will only have to deposit as little as EUR 1,000, rather than EUR 150,000 required for this type of trade. In other words, thanks to the use of leverage, you can trade between 0.5 of a lot and 1 lot in volume even with a deposit of $500-$1,000. Worth remembering:
  • 1 lot = 100,000 units of currency
  • 0.1 lot = 10,000 units of currency
  • 0.01 lot = 1,000 units of currency
What types of leverage are there? As a rule during registration, each broker offers the trader a choice of leverage size to work with based on trading terms and conditions. Brokerage companies can offer customers leverage of up to 1:3,000, which is in violation of risk management rules But before he/she opts for a specific leverage size, the trader must learn that, the greater will be the amount borrowed and his/her expected profit, the riskier will be his/her trading and the more serious the losses he/she may take. The best option for trading Forex is most frequently a leverage of 1:100..

How to minimize the risks of leverage-based trading?

  • First, do not forget that only after a successful test of your trading strategy from a demo account should you open a real account.
  • Second, remember that, when using leverage, you will increase your trading volume but will take increased losses from failed trades and that only under sound management of risk and your trading account will you be able to gain anything from the use of leverage. Better not to use more than 3-5% of your account balance in one trade. This approach will help you reduce trading risks, survive high market volatility or wait out correction trends.
  • Third, the best way to guarantee the security of your deposit during trades with leverage is the Stop Loss option, as it allows you to preset the level of losses that will not be fatal to the deposit..
An important conclusion: There are three safe ways to minimize trading risks:
  • Unconditional application of the 3-5% rule;
  • No trades with greatest possible volume;
  • Regular use of the Stop Loss option.
In any case, the whole issue of the risk during the use of leverage lies in the trading of the trader himself/herself and in how well thought out it is. Why is the leverage of 1:100 the best option for trading Forex? In case you are just getting started in the market, you’d better start trading with the classic size of 1:100. Over time, as you follow the results of your trades, your experience will convince you how safe and profitable the 1: 100 leverage is. It should be understood that, when opening a trade in the currency pair EUR/USD of 0.1 lot volume and 1: 100 leverage, the broker will freeze only $100 in your account (subject to the current price of 1.0000), but you will be free to use the remaining $900 as you please. You can use it to buy large amounts of the same or any other trading tool. It will be as easy to buy an entire lot of 100,000 currency units, which, absent leverage, would only be possible if you owned between $100,000 and $150,000. If you have not decided on a brokerage company that will help you achieve the desired financial heights, pay all of your attention to Gerchik & Co, as not only does this broker provide the optimum trade size leverage of 1:100, but also it ensures instant order execution (of 1-2 milliseconds in length, which is also ideal for trading with trading robots). The broker company also provides 0-pip spreads, depending on the currency pair, which should absolutely convince you that cooperation with Gerchik & Co is the way to go. Be successful, trade by the rules and leave the market only after making a profit!

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