Understanding Margin & Leverage
Slide 1 of 5
Forex brokers give you something called "Leverage". Leverage allows you to control a large amount of money using very little of your own capital. It is essentially a loan provided by the broker, and it is the most powerful (and dangerous) tool in trading.
1:50
You deposit $1,000
Control $50,000
1:100
You deposit $1,000
Control $100,000
1:500
You deposit $1,000
Control $500,000
⚠️The Double-Edged Sword
Leverage amplifies everything: both your profits AND your losses by the same factor. With 1:100 leverage, a 1% move in your favor = 100% profit on your deposit. But a 1% move against you = your entire deposit is gone. This is why leverage management is the single most important skill in Forex.