Leverage
Leverage is a commonly known Forex industry term. Leverage allows Forex brokers to offer traders a multiplied return on their investments, and is the main reason as to why the Forex market became so popular with investors.
With a small increase or decline in a financial instruments value, an investor has the chance to profit off that price movement. For instance: With a leverage of 100:1 on any given currency pair, a movement in value will be amplified by 100 to determine the change in price. Investors must also consider that along with the multiplied affect leverage can have on profits, it works the same when enduring a loss, again depending on which way the financial instruments price fluctuation will determine a profit or loss.
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