Forex trading, as with spread betting, allows you to trade with leverage. This means that one only needs to put in a small amount of the actual market price in order to place a trade. In this way, leverage enables you to make larger trades than the capital available in your account would allow with regular trading. The amount of leverage available in the forex market makes it an appealing avenue for many speculators.
However, although trading on leverage magnifies potential gains, it also increases the risk of losses. Investors can realise large gains when rates change favourably, but also incur the risk of equally large losses if rates move against them. This makes it essential for traders to have a thorough understanding of the forex market before committing to a trade – and demonstrates why it is important for new traders to take time to learn how to trade forex. Forex has a great deal of potential for the savvy trader, but education, strategy and patience are needed.
ETX Capital offers currency pairs with maximum leverage of up to 200:1 (400:1 on the MT4 platform*). Why not have a look at our Forex spreads on currency markets and select a pair that best suits you.
Traders should bear in mind that leverage settings can change based on market conditions and that increasing leverage increases risk.