Leverage:

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In the world of forex trading and brokers, leverage is an important factor which needs to be fully understood as it plays a vital role in the buying power of your account. The choice of leverage is offered upon the opening of a brokerage account and is what influences your purchasing power into the market as a trader and also determines the amount of margin required for each individual trade.

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Ultimately, Leverage is something which can be customised to really gear up your account in order to execute trade positions greater than your actual margin/ balance. For example; if you have £2000 of margin in your account and a £200,000 position is opened you have leveraged the account by 100 times or 100:1. If you open a £400,000 on the other hand then the account has been leveraged 200 times or 200:1. Many amateurs step into the game with high hopes set on using high leverage in order to achieve large gains but it is important to note that leverage can magnify losses in an equal manner when used inappropriately.