What Is Leverage? | FXTM Learn Forex in 60 Seconds

Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Leverage in forex is like a “loan” that the broker gives the trader so that the trader has more capital to trade with than what he or she initially deposited. Watch the video for the full definition straight from FX Guru and FXTM Head of Education, Andreas Thalassinos.

Disclaimer: The content in this video comprises personal opinions and ideas and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.

[miguelcosta]

So I think what leverage is, it's basically just multiplying your profits/losses. You don't own the 1, 000, 000, in the example, you still just own 10, 000; but every pip you profit from or lose from, it's going to add/subtract from your margin as if you had 1, 000, 000. If you lose enough until you have no more of your margin, it's over, you can't go negative. In EUR USD for example, how would people make significant money by only capitalizing on changes so small? EUR USD barely changes + or -0.01 nowadays each day, if you used a leverage of 1:1, you would never make significant money. So leverage allows you to amplify/multiply your profits and losses to something like few dollars in the example of a small account. I don't know if I'm 100% correct.

[Iflexxx_]

Thanks FXTM.Explained it in just 60seconds.

[MiceDevelopment]

if i lost the trade do i eligible to pay back the losses?

[usmannoor]

If someone use 1:10 ratio of leverage and his own capital 1000 usd.for example, he buys a pair of any currency lot 0.10 Price of 0.10 lot is 10, 000 his capital is 1000usd rest of money provides the broker as leverage option . At the end of the day, he has to pay interest on 9000 which he got from the broker as leverage or not .

[billychan]

What I do not understand is this: Leverage is not dangerous I believe coz in your video trading 1, 000, 000 Eur is basically 10lots, Am I right ? If that is the case, shouldnt the lot size be the concern here? I can have 1:100 when I have 10000EUR but I can enter a trade with 0.1lots=10000EUR with the margin of 100EUR at risk

[usabshir]

You said leverage is a loan, but usually the loan must be repaid and this so called leverage can't use as you want so what is your aim?

[trvygrp]

전문직 내지 업이없는 사람이 가지는 내적 상실은 안가져본사람은 모른다 이로 나는 어떤것도 이해하게 되었다! 사는 기본권에도 못들어가는 이런 패단은 다시는 없어야한다 그러나 사실은 하나님이
다주신것인데도 찾지못하고 다른쪽에서 헤맨것이다! 이것도 개인과 가문이 속은 것이다! 하나님은 그 잃어버린것을 보상해주시고 원하는만큼 회복시켜주시리라 믿는다!