![]() Say you decide to enter into a position in a financial instrument with a notional value of $100,000. ![]() Let’s take a practical example to demonstrate this. Leverage can be calculated using the forex trading math formula below: Using these funds coupled with other client funds, the broker can then place trades with their liquidity providers and interbank partners. What is Margin? Margin is the good faith deposit required by your broker to allow you to open a position. So, what is leverage in trading? Leverage gives a trader the ability to control a larger position by using a small portion of their own funds and borrowing the rest from their broker. ![]() Though they are closely tied, you should understand the difference between the two, and know how to calculate each. Many novice forex traders tend to confuse margin and leverage. ![]()
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