As a beginner, it is very difficult to start trading with low capital.
Using the right rate can solve the problem of low capital, allowing the trader to make a profit on more than his invested capital.
It is important for all traders to understand FX leverage and how to use it.
Leverage is a form of financing a trade that multiplies a trader’s profits.
And leverage can amplify losses.
Through leverage, traders basically borrow money to increase their trading positions substantially beyond what their capital can achieve.
To put it simply, if we need $100,000 to trade a lot, then if the trader uses 100 times leverage, we can trade a lot for only $1,000.
Therefore, the existence of leverage is not meaningless, it can use small funds to leverage a large contract, lower the trading threshold to allow more people to enter the foreign exchange market.
Leverage in the relatively special position is not to be ignored, the use of good can provide security for income, with small capital to make large profits.
But if not used properly, it will have the opposite effect.
So it’s not that more leverage means more leverage, and higher profits mean higher risk.
In the current market, most people are often looking forward to the arrival of big risk events, and think that they can obtain high profits in the event of big risk.
Follow the trend of the situation is not in a minority, we only heard Zhang SAN do foreign exchange earned money, but can not hear Zhang SAN once assumed how much risk, only to hear “make money” two words on the swarm, finally some small white grew up into a small leek.
Therefore, in the foreign exchange market, don’t think that too little leverage and too much investment cost is a bad thing. Sometimes it is a good development to protect the principal.
