confused about leverage in forex brokers?
none g asked:
let’s say you put in 1000 usd and the leverage is 100:1. you trade let’s say for instance USD/JPY at a rate of 1 USD for every 100 Yen for example. you buy USD and you run out of money in your account. my question is, is the leverage ALREADY given to the trader or the trader is trading without leverage meaning that the trader’s 1000 USD can become 100,000 dollars? i’m confused because i heard that you can only buy or sell in the amount of 100,000.
let’s say you put in 1000 usd and the leverage is 100:1. you trade let’s say for instance USD/JPY at a rate of 1 USD for every 100 Yen for example. you buy USD and you run out of money in your account. my question is, is the leverage ALREADY given to the trader or the trader is trading without leverage meaning that the trader’s 1000 USD can become 100,000 dollars? i’m confused because i heard that you can only buy or sell in the amount of 100,000.
check out this forex site. you can register and participate in their live chat and get answers for all your questions from forex traders around the world, else a personal account manager is available to help you.
http://www.forex-registration.com - Helping you win at forex
The $100,000 amount you are looking at, reflects one standard contract. But you would need to trade either a mini or probably a micro contract with such a small account value. One mini contract would be $10,000, and now there is a micro contract reflecting $1,000 of currency. You can literally trade any amount you wish, within the limitations of what is offerred. Otherwise, you would not be able to start with only $250.
To answer your question, you can buy 1 std contract with your $1,000, and watch your acct value swing like crazy (you are over-leveraged). Or you can buy 10 mini contracts or 100 micro contracts and do the same thing.
Realistically, trade two or three mini’s or less. You want to be able to lose several trades in a row, and still play the game. Leverage is the killer here.
Forex Broker Best
Hi,
What 100:1 leverage means is that for your $1,000 real money trading account, you are allowed to trade up to $100,000 in the market.
You do not actually own the $100,000. Your $1,000 real money gives you the right to trade WITH the $100,000.
So for example if your $100,000 becomes $100,010 when you win in your trade, you’ll gain $10.
This means that your $1,000 real money account earned you $10 real money. At no point are you allowed to withdraw any of the $100,000… it’s only there for you to make money with.
Hope my explanation is clear.
To learn more about Forex trading, you may want to download my free 26-page guide at
Forex Broker Best
You may be interested in some of the information on this site reguarding forex.