The Hidden Power of Trading (Leverage and Margin) – Day Five of the Educational Series
How do you trade with large amounts with a small capital?
The key lies in leverage. Imagine you want to buy a car worth $10,000 to sell later, but you only have $100. In the Forex market, the financial broker stands beside you and says: "Give me the $100 as margin (Margin), and I’ll lend you the rest so you can buy the car and trade with it".
Margin: This is the deposit held to secure the trade.
Leverage: This is the multiplier that lets you buy a financial asset larger than the size of your real account.
But beware! Leverage is the sword that cuts both ways. Just as it magnifies your profits if your analysis is correct, it also magnifies your losses if the price moves against you—and you may lose the entire "margin" you entered with. The successful trader chooses a reasonable leverage and always uses the "Stop Loss" order.
$BTC $MSFTB $XAU
How do you trade with large amounts with a small capital?
The key lies in leverage. Imagine you want to buy a car worth $10,000 to sell later, but you only have $100. In the Forex market, the financial broker stands beside you and says: "Give me the $100 as margin (Margin), and I’ll lend you the rest so you can buy the car and trade with it".
Margin: This is the deposit held to secure the trade.
Leverage: This is the multiplier that lets you buy a financial asset larger than the size of your real account.
But beware! Leverage is the sword that cuts both ways. Just as it magnifies your profits if your analysis is correct, it also magnifies your losses if the price moves against you—and you may lose the entire "margin" you entered with. The successful trader chooses a reasonable leverage and always uses the "Stop Loss" order.
$BTC $MSFTB $XAU