Leverage in Forex and other Financial Instruments
What is Leverage?
The forex market can be attractive to many investors because of several reasons but the main is leverage. Generally, leverage means borrowing capital as a fund source when investing to expand assets by amplifying return on investment thus carrying more risk. It is the amplification of the money deposited in the traders’ accounts. It gives them the ability to trade big positions by using small amounts of money.
Investors like the idea of borrowing capital to enhance profit, which is not available in other markets. These borrowed funds are not an amount that has to be paid after a certain time with interests. However, swap charges may be applied for holding the position overnight.