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Large Leverage in the Forex Market

There’s a very high volume and high liquidity in the Forex market. This draws many banks, investment houses and brokers into the market, thus creating competition.

And, since there’s a high volume, open positions can be closed at almost any market condition. Trading agencies can offer their customers very high leverages, something that is uncommon in other financial markets, such as the stock market.

The leverage ratio can sometimes surpass 200. Guarantees of $10,000 can be sufficient for a deal of $2,000,000.Most traders usually use a leverage of 100. A common deal would be of $100,000 which would demand guarantees of $1000 – not too much cash for a normal investor.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.