Forex leverage, or trading with borrowed money, is one of the main attractions of the forex market. In forex trading, you get much higher leverage than in stock trading. With leverage, you only need an initial margin or a small capital in your account to open large positions. The forex leverage of 100:1 is common in the foreign exchange market, which means that you can trade a value of $100 for every $1 in your account. In other words, with a leverage ratio of 1:100, you can trade 100 times the value in your account.
Pros of forex leverage for beginners
1- As mentioned earlier, beginner forex traders who dont have large capital can use leverage to make large trades. Traders only have to deposit an initial margin, a small percentage of total trade value, to initiate a trade.
2- The forex leverage allows you to trade using borrowed money from a broker. However, you dont have to pay interest charges on leverage, which makes using leverage a profitable and inexpensive proposition.
3- Because you can make large trades with the forex leverage or borrowed money, you have the potential to significantly magnify your gains in case you make a profitable trade. The magnified returns are not possible if you only use your own money in your trading account.
Check out our Article on Forex Leverage on Aximdailyto learn how beginner can ultilise forex leverage to maximise their profit with small starting capital
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