This document discusses leverage in forex trading. Leverage allows traders to control larger positions in the market using only a small amount of capital in their trading account. Brokers offer leverage ratios ranging from 50:1 to 400:1, allowing traders to make large profits but also exposing them to significant losses. While leverage makes forex trading exciting, it can also increase risk, so traders must manage it carefully through conservative risk controls. Professional traders tend to use lower leverage ratios than novices to reduce risk and increase consistency.

2. 1. What is Leverage?
2. Advantage of Using Leverage
3. Use of Leverage in Forex
4. Leverage Amounts
1. 50:1
2. 100:1
3. 200:1
4. 400:1
5. Professional Traders and Use of Leverage in Forex

3.  Leverage means to use something small to
control something big.
 In forex trading, it means you can have a
small amount of capital in your account to
control a larger amount in the market.

4.  The advantage of using leverage is that you
can make a large amount of money with only
a limited amount of capital.
 The problem is that you can also lose a large
amount of money trading with leverage.
 It all depends on how carefully you use it and
how conservative your risk management is.

6.  Leverage makes a rather boring market
incredibly exciting.
 Unfortunately, when money is on the line
exciting is not always good, but that is what
leverage has brought to Forex.

7.  Without Use of Leverage in Forex, traders
would be surprised to see a 10% move in one
year in their account.
 However, a trader using too much leverage
can easily see 10% move in one day in their
account.

8.  It is important to know that much of the
volatility you experience when trading is due
more to the leverage on your trade than the
move in an underlying asset.

9.  Leverage is given in a fixed amount that can
vary with different brokers.
 Each forex broker gives out leverage based
on their rules and regulations.
 The amounts are typically 50:1, 100:1, 200:1
and 400:1.

10.  Fifty to one leverage means that for every $1
you have in your account you can place a
trade worth $50.
 Example: If you deposited $500, you would
be able to trade amounts up to $25,000 at
the market using 50:1 leverage.
 It's not that you should be the full amount
$25,000 in trading, but you would have the
ability to trade up to that amount.

11.  One hundred to one leverage means that for
every $1 you have in your account, you can
place a trade worth $100.
 It is a typical amount of leverage offered on a
standard lot account.
 The typical $2000 minimum deposit for a
standard account would give you the ability
to control the amount of $200,000.

12.  Two hundred to one leverage means that for
every $1 you have in your account, you can place
a trade worth $200.
 It is a typical amount of leverage offered on a
mini lot account.
 The typical minimum deposit on such an account
is nearly $300.
 With $300 you would be able to open up trades
up to the amount of $60,000.

13.  Four hundred to one leverage means that for
every $1 you have in your account, you can
place a trade worth $400.
 Some forex brokers offer 400:1 on mini lot
accounts. I would personally be wary of any
broker that provides this type of leverage for
a small account.

14.  Anyone making a $300 deposit into a forex
account and trying to trade with 400:1
leverage could be wiped out in a matter of
minutes.

15.  Many Professional traders trade with the low
leverage.
 Keeping the leverage lower protects your
capital when you make trading mistakes and
keeps your returns more consistent.
 Many professionals use leverage amounts like
10:1 or 20:1.

16.  It is possible to trade with types of leverage
regardless of what the forex broker offers
you.
 You have to deposit more money and make
fewer trades.

17.  No matter what your trading style, always
remember, just because the leverage is there,
it does not mean you have to use it.
 The less leverage you use, the better.
 It takes the experience to know when to use
of leverage in Forex and when not to.