Many novices or beginning trader who usually can not understand the concept of leverage. Basically, if you or your partner has a capital of $ 1,000 to negotiate, and if a margin of 1:50 to effectively manage and trade legal capital increase of up to $ 50,000. But the Big Draw is back, one or two less than one percent completely against you and your negotiating position wiped out capital to zero. If it was a start in the forex dealers no longer than 1:20 margin, at least comfortable and profitable and then and only then after we can try to use higher margins.
Most of the questions is 1:20, what margin? This means that $ 5,000, you will be able to control a capital of $ 100,000. Suppose you go to the currency pair to trade EUR / USD and by using our entry strategy beginners and decided one side of work. This means you are betting that the dollar be devalued against the euro. Proffit and learn Forex
Suppose the price in euro / dollar is 1455, for example. Even if your trading capital is $ 5000 and you are still operated with 1:20 and the efficient exchange of 100,000 a million dollars. If the current interest rate of 1.455 means that you get 100 000 / 1455 or approximately € 68.728.
If the trade does not go is a very good job will be increased in your favor and 1% in U.S. dollars in your direction margin has fallen from 20% of the average starting capital of your negotiating partner. So, if EUR / USD rate moves from 1.455 to 1.469, we will be able to € 68,728 $ 101,000 will revert with a profit of $ 1,000. and profits are high. From the beginning of your capital account was $ 5,000, in fact, a 20% increase in your account. However, if you appreciated against the dollar trade 1% against the euro in your account will be reduced $ 4,000. It is good for Forex Strategy.
