Description:

One of the characteristics of forex trading is the ability to utilize financial leverage. Essentially, leverage allows you to gain exposure to large amounts of currency, without having to pay the full value of your trade up front. Leverage is expressed as a ratio. 1:1, for example, means no leverage. While 20:1 allows you to control a position twenty times larger than your deposit. Although leverage can help you start trading with less money and may increase potential profits, it also increases your risk exposure and can result in greater losses. You must ensure you understand the risks involved with leveraged trading and manage them correctly. To learn more about forex, visit www.trading.com/au/learn.