yogeshwartyagi Posted October 24, 2010 Share Posted October 24, 2010 Leverage simply means the % amount of money you are allowed to borrow from the broker when you open a position. Typically a Broker would allow you borrow 99% of the total value required to open a trade and you only need to come up with the remaining 1%. So if you are about to trade $10000 then you only need to have $100 of your own. Usually Forex broker won’t charge you interest on the borrowed amount. Quote Link to comment Share on other sites More sharing options...
sirwilly Posted October 26, 2010 Share Posted October 26, 2010 Leveraging is a potential source of good profits for the trader which is why most traders always go on high leveraged positions. Quote Link to comment Share on other sites More sharing options...
yb3889 Posted November 3, 2010 Share Posted November 3, 2010 Oh i understood now well Actually in share trading we call it margin - our broker provide us several times the margin of our balance, as my broker allows me to buy 4 times the value i have in my account. Quote Link to comment Share on other sites More sharing options...
yogeshwartyagi Posted November 5, 2010 Author Share Posted November 5, 2010 @sirwilly you are quite right - more money availabe for you to buy increases the potential of more profit. So more the leverage more you can trade for. @yash its not exactly margin - but brokers allows you to buy for several times the margin for example 4 times in your case, and that 4 time thing is the leverage in my knowledge. Quote Link to comment Share on other sites More sharing options...
tprhzm2009 Posted November 8, 2010 Share Posted November 8, 2010 Leverage really play an important in forex trading, some traders like it becasue they can help them earn more from forex market, but others don't like it because it can make them lost entire money. all of this depends on the forex knowledge you mastered. Quote Link to comment Share on other sites More sharing options...
chuna1985 Posted November 13, 2010 Share Posted November 13, 2010 Leverage is simply the the percentage amount of money a forex trader is allowed to borrow from his/her broker when they open a position in the forex market. Eg 1 : 50 or 1 : 500 Quote Link to comment Share on other sites More sharing options...
sirwilly Posted November 22, 2010 Share Posted November 22, 2010 With a high leverage, the trader is able to buy foreign exchange worth several times his purchasing power. Most traders will go on a high leverage when their analysis shows a green light and there is little chance to lose. Still, SL should be observed and once the market stats rise, it should trail the new levels. Quote Link to comment Share on other sites More sharing options...
alam3636 Posted November 25, 2010 Share Posted November 25, 2010 This is right leverage allows us to trade several times our capital and enhances amount of profit we get in a single trade, But simultaneous higher leverage can put our entire capital into risk as if leverage is 100 times and we get a loss of 1% being our capital only 1% we loose everything. Quote Link to comment Share on other sites More sharing options...
hongshui Posted November 26, 2010 Share Posted November 26, 2010 The leaverage have kinds of type,contain 1:10,1:20,1:50,1:100,1:200,1:300,1:500,but the 1:100 is so common.If you have lots of fund,I suggest choose the small ratio of leaverage.If you have little money,you can choose the big ratio and that can obtain more profit with great risk! Quote Link to comment Share on other sites More sharing options...
sirwilly Posted November 27, 2010 Share Posted November 27, 2010 Yea, leveraging is often a big problem when it is mishandled. A high leverage should only be undertaken when its potential risks to reward ratio is adjudged to be in favor of the rewards for the trader. Otherwise, we may merely be feeding the market with our funds. Quote Link to comment Share on other sites More sharing options...
ellliottt Posted December 23, 2010 Share Posted December 23, 2010 Leverage is what we Brits call gearing. Think of it like the gears on a bicycle. With a high gear you pedal slowly and the bike goes fast. If you come to a hill you go to low gear, pedal fast and the bike goes slow. In stock world there are various forms of gearing.I will come to the one I think you are referring last. You have financial gearing (leverage) which is the ratio between money the co. borrows (loans) and the money from shareholders (equity).Also operational gearing, which I think is the ratio of workers to output.i.e. the difference between a work intensive industry and not intensive. Quote Link to comment Share on other sites More sharing options...
rehan Posted December 29, 2010 Share Posted December 29, 2010 Leverage is double sword in forex. You cannot think that it is a profit increasing tool but it can go against you if you made a trade at wrong time. So you should be very careful while choosing leverage and must minimize the risk before doing trades. Quote Link to comment Share on other sites More sharing options...
mownabratadey Posted January 1, 2011 Share Posted January 1, 2011 Leverage is the important part of the gain Or profit & could effect on loss. High leverage about 1:500 can have big profit with small investment OR/ can go for big loss with big investment.. Thus select the leverage at perfect position is very important for good trader.. Quote Link to comment Share on other sites More sharing options...
yogeshwartyagi Posted January 7, 2011 Author Share Posted January 7, 2011 Leverage is the important part of the gain Or profit & could effect on loss. High leverage about 1:500 can have big profit with small investment OR/ can go for big loss with big investment.. Thus select the leverage at perfect position is very important for good trader.. I agree with you though the borker allow us to use higher leverage like 1:500 but we should only use such a leverage so that our trade do not close on small fluctuations and due to lack of margin. Quote Link to comment Share on other sites More sharing options...
yogeshwartyagi Posted January 18, 2011 Author Share Posted January 18, 2011 Well you can understand it something like this You deposit 100$ in your forex account and you want trade gold Now you can only buy very little less than a gram with this much but when your broker gives you higher leverage e.g. 100 he shall allow you to buy for 10000$ so that you get profit even with little fluctuation in rates. Quote Link to comment Share on other sites More sharing options...
boniez Posted January 21, 2011 Share Posted January 21, 2011 actually leverage is not very influential in our failure as long as we are able to manage it as usual, even I've never noticed it every i opened an account Quote Link to comment Share on other sites More sharing options...
mownabratadey Posted January 22, 2011 Share Posted January 22, 2011 HIgh Leverage is something that can leads the trade to a big profit or huge loss... So I suggest everyone not to use it by your greed or any stress.. SO that we will be playing safely with that real amount ..I am doing it from my 1st day till now... & hopefully I am able to earn some fixed profit also.. Quote Link to comment Share on other sites More sharing options...
Legendkid Posted January 22, 2011 Share Posted January 22, 2011 Looks like i will be learning a lot from this forum.Now that i know what's leverage.I can start trading a demo account firstly,and then enter the real game of profit or loss.But looks to me,that borrowing a huge leverage from broker can make one gain much or loss much..But if we loss all,do we repay the borrow percentage? Quote Link to comment Share on other sites More sharing options...
sirwilly Posted February 20, 2011 Share Posted February 20, 2011 Correct. A high leverage offers the trader the chance to gain a lot of profits, but at the same time, do not forget that by leveraging, you concentrate all your deposits into a few lots so that a loss willl have greater and far-reaching consequences. Quote Link to comment Share on other sites More sharing options...
indieover Posted February 26, 2011 Share Posted February 26, 2011 actually leverage is not very influential in our failure as long as we are able to manage it as usual, even I've never noticed it every i opened an account yes i think leverage has no effect in increasing our risk. why do i read many members saying our lot will greatly be influenced by our leverage. i don't think that would be the case. so i think that it is safe to use high leverage. just avoid high volume. Quote Link to comment Share on other sites More sharing options...
andry777 Posted March 1, 2011 Share Posted March 1, 2011 Leverage is facility which is provided by brokers to support traders who didn't have much amount of capitals so they could trade although only have small amount of capital. For traders, leverage is really important to support them so they could trade in forex but leverage could take part to increse its risk of losng too. Quote Link to comment Share on other sites More sharing options...
yogeshwartyagi Posted March 8, 2011 Author Share Posted March 8, 2011 The intention behind providing leverage to traders is that they can trade more quantities for their money. Now suppose total cost of a transaction is 1000$ and one enter in trade for +-1% profit/loss, so with a leverage fo 100 your capital can afford upto 1% loss in other words our deposit is just acting as a security for any expected loss. Quote Link to comment Share on other sites More sharing options...
andry777 Posted March 21, 2011 Share Posted March 21, 2011 I will use leverage which is the highest that is offered by brokers. Using high leverage will make our trading safer than we used lower leverages. Quote Link to comment Share on other sites More sharing options...
indieover Posted March 26, 2011 Share Posted March 26, 2011 choosing lower leverage will only allow us to choose small lot also. that's why they say we should only choose small leverage if we want to reduce our risk. so in a way they are correct though it's actually the lot size that increases our risk. Quote Link to comment Share on other sites More sharing options...
Nikhil Posted March 27, 2011 Share Posted March 27, 2011 @andry777 i also use highest leverage but if we increase lot than this leverage will not help us . many time for greed i increase my lot size and as victim of great loss. but its true if we control ourself than its very good to use highest leverage. Quote Link to comment Share on other sites More sharing options...
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