Excerpt from: Forex Tips
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| February 23, 2010 | | Leverage is the amount of currency one can control relative to the amount of capital one has. | |
Leverage has become a scapegoat for poor risk management in trading. I
feel as if leverage is being blamed more and more without anyone taking
a moment to think what the real problem is. First, let's take a step
back for those of you who don't know what I am talking about. For the
purposes of this article, we will assume "leverage" refers to trading,
specifically forex trading.
Leverage is the amount of currency one can control relative to the
amount of capital one has. That's it. In forex, most traders have 100:1
leverage. That means for every one dollar of capital a trader has, they
can control one hundred dollars.
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| Topic Tags: amount, capital, forex, leverage, management, means, trader, traders, trading | |
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