What is Leverage Ratio in Forex
Most of traders are confused with the term financial leverage. So what is Leverage Ratio in Forex? Well, the textbook definition of leverage is having the ability or facility to large amount of money using very little of your own money. A more common type of leverage is Real Estate financing. Sometimes you can borrow up to 90% of the property price. You just need to come up with 10% of the property purchase price and banks are willing to loan you up to 90% of the purchase price. Now, that’s a 1:10 leverage ratio. If you want the highest leverage ratio, you should really check out this broker.
Bear in mind though, leverage is a double edge sword which can benefit you greatly (if you know how to use it correctly) and it can also hurt you bad if you use it the wrong way.
Ready for the most beautiful in Forex… the leverage ratio is out of this world which is why for many Forex traders, Forex trading is the ultimate investment vehicle. You might have seen different Forex Brokers offering leverage of 1:50, 1:200, some even at 1:400.
What is Leverage Ratio in Forex – what does it do for you
What these numbers means, for example, if it’s a 1:400 leverage ratio, you just come up with $1000 and your broker allows you to control positions of up to $400,000. That’s what 1:400 leverage ratio means and your gains will be magnified 400x. But please don’t get too excited with this idea because your loss will also be magnified 400x.
In essence, at 1:400 leverage ratio, with $1,000 you have the ability and facility to control $400,000.
If you leverage ratio is 1:1 and you control a $400,000 asset, and assuming you made a capital gain of $4000, it just means your returns is 1%. But with a 1:400 leverage ratio, your returns are very different because a $4000 capital gain over a $1000 capital means a astronomical 400% return on investment as compared to the tiny 1% return on investment. We hope you see this wonderful opportunity that is ahead of all Forex traders. It’s beautiful but it’s dangerous in the wrong hands. So be sure to understand what you do….
If you know and understand the beauty of leverage, then we have even better news for you. The broker we use offers the highest (yes HIGHEST) leverage ratio in the Forex world. 1:888 leverage ratio. If you have a good profitable trading system, you really should open an account with this broker and claim all the new account bonuses that they offer.
We wish you well in using financial leverage ratio (smartly) to crush the market.
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