Margin and Laverage

[kaito kid]

“leverage” is having the ability to control a large amount of money using none or very little of your own money and borrowing the rest.

For example, to control a $100,000 position, your broker will set aside $50 from your account ( Like In FBS Forex Broker ). Your leverage, which is expressed in ratios, is now 2000:1.

You’re now controlling $100,000 with $50.

Let’s say the $100,000 investment rises in value to $101,000 or $1,000. If you had to come up with the entire $100,000 capital yourself, your return would be a have 1% ($1,000 gain / $100,000 initial investment).

This is also called 1:1 leverage. Of course, I think 1:1 leverage is a misnomer because if you have to come up with the entire amount you’re trying to control, where is the leverage in that?

Fortunately, you’re not leveraged 1:1, you’re leveraged 2000:1. The broker only had to put aside $50 of your money, so your return is a groovy 400% ($1,000 gain / $50 initial investment).

[uncle gober]

I also do a calculation of margin on each trade based on the leverage that I use so I could find out how much margin is used. I usually use a lot 0.01 and a leverage of 1: 500 when I trade in Armada Markets. with this margin calculator we can calculates the minimum account balance required in order to be permitted to open the specified trade at the selected leverage and lot size.

[eaglehyipmonitor]

i am also using leverage 1:2000 because leverage is pay very important role in forex market.

if you have low fund then you can survive with this leverage 1:2000