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Understanding The Leverage

 

USD/JPY Leverage: 100:1

Account balance: $ 4,000

USD/JPY Forex contract value:  $100,000 per 100,000 BCU

 

Here is a quick example of what a 100:1 leverage could do on a standard Forex account utilizing a leverage of 100:1. Assume you buy 2 lots of currency pair USD/JPY, that is $200,000 worth of JPY (1 lot = 100,000 BCU). In order to complete the transaction, based on a margin of 100:1 or 1%, you need to commit a margin of $2,000. If market moves against you 100 pips that is about $1,700 in loss. A greater leverage will give a greater purchase power however it will also expose you to a higher risk-over-invested-capital ratio.

 

Disclaimer: Examples provided are intended for educational purposed only and are not meant to be exhaustive on the argument, neither substitute the risk disclosures and additional risk disclosures you need to read and understand and sign, before opening any trading account with us. Concepts expressed on this page do not aim to decry futures and Forex trading regardless of the leverage used, rather to create awareness especially among less experienced traders, as there is a great risk of loss in these financial instruments and only risk capital should be employed.

As we understand that no trader is alike, FastBrokersfx.com has the right trading product that fits your  needs.  Whatever your trading need
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