Basic Concepts of Leverage

In forex trading, there is a feature called "leverage". Unlike foreign currency deposits and MMF or other financial products that use foreign currencies, in principle this leverage is a tipping point, namely buying and selling with capital that is less than the real value of the transaction carried out. This amount of leverage is often imposed by restrictions depending on each country.

Leverage is expressed as a ratio. If Leverage has a ratio of 1: 2, that means you can hold a position twice as big as your initial investment. Leverage with a ratio of 1: 100 allows to open a position of 100 bigger.

Leverage application

Assume you have $ 2000 in your trading balance, and you want to invest it in USD / JPY without L leverage . This allows you to trade 2 micro lots ¹. But let's see what you can get from this trade using leverage with a ratio of 1:50. With your $ 2,000 you can allow you to hold $ 100,000 from capital. This allows you to trade USD / JPY in full-size lots.