Leverage: the great attraction of the Forex.

   abril 19, 2016       Dicas do Zé Aparecido

---

Leverage: the great attraction of the Forex.

Let's assume you have $ 100 in your account at the brokerage firm through which trades in the Forex market. Then you enter a purchase transaction, the EUR / USD at 1.3548 and decided to close the position when the price reaches 1.3568 - a small variation in the pair, which can happen in minutes depending on market movement. With this amount in a negotiation, the value of a pip would be 0.01 US dollar. Taking the example of trading up, your profit would be only 0,20 US dollar. It is clear that to make a reasonable profit in this market, you would have to invest large amount of money. Thus, the Forex would not be an interesting market for the small investor. For this, the advantage of participating in the Forex is just to be able to negotiate values ​​that allow you considerable profits without for this need to invest or risk big amount of money.      This is possible through leverage. In Forex, the brokers or brokers, English term, usually offer leverage of 1: 100 or 1: 200, but some offer alvancagens arriving to 1: 500. To explain further, let's use a leverage of 1: 100: with a leverage of 1: 100, if the investor has in his account with the brokerage firm, the amount of 100 US dollars, as in the example above, it may open trading positions up to 10,000 US dollars; ie 100 times the value it has. For this, the broker automatically lends the investor to 9900 US dollars. Now, considering the above operation, the profit would be 20 US dollars, if the investor to make use of the entire margin allowed, as to the value of 10,000 US dollars in operation, the pip value would be 1 US dollar. In the same example, but with a leverage of 1: 200, the profit would be 40 US dollars, for the same value into account, the investor could trade up to $ 20,000 and, for this value pip would be 2 US dollars. Taking into account the value of 1000 US dollars and using a alvancagem 1: 100, the investor can trade up to the value of $ 100,000 and a leverage of 1: 200, to the value of 200,000 US dollars and so on .     You can see that the higher the alvancagem, the greater the possibility of increase in profits. Remember that this also applies to the case of losses. We must be aware of these two possibilities, since no one enters into a negotiation with the intention of losing money, but the possibility of loss exists, as well as the possibility of profit. So try to use higher leverage when acquiring some experience in this market. Fortunately, the Forex losses can be controlled and the investor can determine a maximum value to be reached in case of a price change in the opposite direction than expected. And in any case, even in case of loss, the investor is not the broker should therefore only is allowed to negotiate while the price varies within the safety margin, which is determined by the value that it has deposited with the broker. * In the examples we do not consider spreed in order to facilitate understanding. Leverage: the great attraction of the Forex.