Forex Leverage is defined as the use of borrowed capital, such as “margin” allowing the Forex trader to gain access to larger sums of capital. This can heighten profits and losses and should be used wisely.
Forex Trader A has $5000 USD:
If Forex Trader A has an account leverage of 10:1and they wish to use $1000 on one Forex trade as margin, they will have exposure of $10,000 in base currency ($1000) = 10 x $1000 = $10,000 (trade value).
Forex Trader B has $5000 USD:
If Forex Trader B has an account leverage of 100:1and they wish to use $1000 on one Forex trade as margin, they will have exposure of $100,000 in base currency ($1000) = 100 x $1000 = $100,000 (trade value).
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