Leverage

In forex trading, leverage is a loan provided by brokers that allows investors to trade much larger amounts of a currency than their capital would permit. In other words, you can control a higher value of a currency with limited capital. However, leverage is like a two-edged sword. As it can increase the profits, it can increase the losses too. So it is the client’s responsibility to be aware of this risk.

For instance, an investor can trade $1000 value of a currency by depositing only $100. In this case, he or she uses the leverage of 1:10.