Understanding Leverage in Forex Trading: How to Maximize Gains and Minimize Losses What Is Leverage
Leverage in forex trading is a tool that allows traders to control a large position with a relatively small amount of capital. For example, with a leverage ratio of 1:100, a trader can control $100,000 in the market with just $1,000 in their trading account. This ability to amplify trading power makes leverage highly attractive, as it increases profit potential without the need for a substantial initial investment. However, leverage is a double-edged sword—while it can magnify gains, it can also result in significant losses.