Forex leverage

Leverage is like a short-term loan your forex broker provides, so that you can trade in the forex markets with the boys. If you remember from the forex basics section, you could start an account with as less as $25, and still open a 1 Lot position which requires $10,000. This is simply because the trader borrowed $9975 from the forex broker under a leverage of 1:400. Some brokers provide leverage up to 1:500.

Fortunately (or unfortunately) the forex market gives you one of the highest leverages in all financial markets. You now will see why leverage is a double edged sword.

The main reason why 90% of traders lose money

One of the main reasons why many people start forex trading without learning is because you can get so much leverage. However, not many really know the impact of leverage till it hits. True to its reputation, leverage is the single largest reason new traders lose money and never come back.

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