marylynrymer64Leverage is one of the most powerful tools in trading, but it can also be dangerous if not used properly. It multiplies your buying power using borrowed funds from your broker.
For example, if you have $100 and How short pay works use 1:50 leverage, you can open a position worth $5,000. A small move in the wrong direction could wipe out your capital.
Leverage is commonly used in forex and CFD trading. In the EU, maximum leverage for retail clients is usually limited to 1:30 for forex.
To use leverage wisely, always set a stop-loss. Stop-losses are critical when using high leverage.
Also, calculate your position size carefully. Keep your exposure small, especially if you’re just starting out.
Leverage is a useful tool, but only if you treat it with respect. Use it to enhance your trades, not to gamble.
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