Understanding Leverage: The Good and the Bad

It is a concept that is discussed quite often for its merits and offered prospects, but rarely for the risks involved. In this article we are aiming to provide the reader with a comprehensive view of leverage including all that’s good as well as all that’s bad. Let’s start at the start. Leverage defined In trading, it is possible to borrow money from your broker to trade bigger positions.This means that if you are trading a standard lot of USD, you don’t need to have 100,000 USD in your trading account. Taking 1:100 leverage would require you to actually use only 1000 USD from your account. The rest is leveraged.


Comments

Post a Comment

Popular posts from this blog

Reliable Commodity Trading

The main tasks of the exchange include organization and Reliable Commodity Trading  order of the markets of currencies, goods and capital, simplification of trade processes, equalization of demand and supply to stabilize prices and protect the interests of sellers and buyers from adverse price changes.In the period 1960-2004. the commodity structure of world exports has undergone significant changes: the share of raw materials, fuel and foodstuffs decreased, increased share of finished goods and semi-finished products, as well as other goods. A trader is interested in investing in reliable commodities, i.e. lesser risk. Specialization in the production of goods having maximum comparative advantages is also beneficial in the absence of absolute advantages. The country should specialize in the export of goods in the production of which they have the greatest absolute advantage (if it has an absolute advantage on both goods) or the smallest absolute advantage (if it has no absolute ad...
Read more

Tips to trade in a volatile market

volatile market     Even though it is one of the most liquid markets, there are occasions when it tends to become very volatile, for example when new data is released. For some time after data releases, the market exhibits confusion and this manifests in the shape of market not being able to form a solid trend, or if it happens, a lot of times there will be a V-shaped reversal. There might also be a political event or a natural calamity that brings about a change in the economic set up and reflect in the standing of that particular currency. We don’t realize how many factors affect economies every day until we take a close look at forex. What should be the course of action in this situation then? Given below are some of the steps one can take to prevent volatility from causing too much damage.
Read more