As you know, forex trading requires certain investments.Often new investors could ask the question: "How much money you need to deposit for normal trade?" When the purchase or sale of any currency pair in each application must specify the number of monetary units (volume) that will participate in the upcoming trade deal. This amountis measured in lots. Lot 1, as a rule, is 100 000 units (broker "InstaForex" it is equal to 10 000). The minimum amount for the transaction is 0.01 lots. If the current rate of the euro against the dollar is 1.29 (andforecasts he should grow up a bit), then to buy 0.01 lots will require an amount of 1.29 * 100 000 * 0.01 = 1290 dollars.
Are there many traders who have an initial deposit in the account exceeds $ 1000? The answer is obvious. And so all brokers offer when opening an account to use leverage, ie the ability to trade a greater amount than that which is on deposit. The size of the shoulder trader has the right to choose at their own discretion.On average, it varies in the range of 1:20 - 1: 500, and some brokers this option generally can be up to 1: 1000.
forex without leverage is possible in principle, however, this option is good only for those who hold conservative style trade and has relatively large resources for financing activities.A vast majority of traders Leverage is necessary because without it they could not work on this highly profitable market.
among many investors are of the opinion that the leverage of the trading account is directly related to the risk of loss of savings: the more its size, the greater the risk.This is true, but only partly.In order to clearly explain what the leverage in Forex, consider the following example.Suppose we have two accounts with the same value of the initial capital ($ 1,000), but with different parameters: account №1 has a leverage of 1: 100, and by №2 - 1: 500.
We are 99% sure that the EURUSD near future to grow by 50 points, and want to buy the maximum amount at the rate of 1.2980.In the first run we will be able to buy a 1000 x 100 / 1.2980 = 77041.6 or 0.77 lots.In this case, the appreciation of 0.0001 will mean an increase in our capital for 10 x 0.77 = 7.7 US dollar (1 point for 1 lot of EURUSD is $ 10).If the rate will rise to 1.31, we get (1,31-1,2980) x 10000 x 10 x 0.77 = 924 dollars.Our deposit increased by almost 2-fold.
On the second run the maximum amount of 1,000 x 500 / 1,298 = 385,208 units or 3.85 lots.Rising prices will bring 1 point 38.5 dollars if the deal closed at the rate of 1.31, the profit will be (1,31-1,2980) x 10000 x 10 x 3.85 = 4,620 dollars.It turns out, the deposit has increased by almost five times!Impressive, is not it?
However, the trader may not always correctly predict the future movement of the course, and here high leverage can play a cruel joke - only about 25 points in the opposite direction is almost completely destroy the initial deposit.Indeed, in this case, losses amount to 3.85 x 10 x 25 = 962.5 dollars.In such situations, the broker forcibly closes a losing trade, and no prayers will not help to recover the lost money.
If you open two accounts on our position with the same volume (for example, 0.1 lots), the risk in both cases is the same, and leverage will have no impact either on the amount of profit or the amount of possible loss.
What follows from this conclusion?Big and small arm has its advantages.Big shoulder is useful when participating in contests and well in scalping and small will make trading more comfortable and reduce the risk of large losses.Beginners usually recommend the use of 1: 100 or 1: 200.If you wish to trade with the greatest possible leverage in the case of a real trade that are at stake, "blood" (hard-earned) money, never use in the operations of the maximum amount, or will soon again have to save money on deposit.
