Forex Understanding Margin And Leverage. Leverage enables you to put up a fraction of the deposit to access a much larger trade size. The leverage is the reciprocal value of the margin.
Margin is usually expressed as a percentage of the full amount of the position. Trading on leverage means you can gain the same amount of market exposure by depositing just a small fraction of the total value of your trade. What exactly are margin and leverage and what role do they play in the process of trading currency?
Forex margin and securities margin are two very different things.
Based on the margin required by your broker, you can calculate the maximum leverage you can wield with your trading account.
The leverage is the reciprocal value of the margin. Brokers take your margin deposit and pools it with several others to create a considerable margin pool. It is not just limited to the forex markets.