What to expect from negotiations and leverage? There is a phrase that says it with a lever you can move the world. Conceptually speaking, the purpose of the lever is to offer greater strength than you actually have so you can move heavier things than you alone could endure.
Bearing in mind this classic concept, we can better understand what it means to leverage in forex and what to expect from her.
In the forex market the negotiations are extremely bulky and also with very high values, then it would be like for most low and medium investors to invest capital in a market that handles large transactions of high values? This is where brokers come with the leverage system.
The brokers offer this service to Forex traders so that you can multiply the value of your investment, you may be asking, how so? It’s simple, say you have a capital of R $ 5,000.00 and the leverage offered by the broker service is 100: 1, it means that every real you invest the broker invests 100, that is, with the initial capital R $ 5,000.00 you can invest in positions of up to R $ 500,000.00.
This is so that you can compete more fairly in the forex market where big investors and companies also operate.
But be careful with leverage system, after all, not everything is perfect. It is true that this system offered by brokers can provide incredible gains, but on the other hand, if the investment is misdirected or investor does not know how to manage their negotiations losses can also be leveraged, so you must choose carefully how to leverage their investments. Many brokerage proffer leverage 100: 1, 50: 1 and even 25: 1. It is necessary to weigh the options and see which one fits best at the time and according to your investor personality.