Forex Leverage gives you multiplier effect on money if you know how to use it to your advantage


Forex leverage allows you to trade a bigger sum of money with little money. A forex leverage of 1:100 means for every dollar you deposited as collateral with your broker, you can trade up to $100. Essentially, the $99 is like borrowed money. Good news is, if your trade has a positive swap (e.g. to buy NZD against JPY), then you will be receiving interest payout base on $100 (while you only use $1 to activate this trade).

Do note that forex leverage can work against if you over trade or over leverage.


  • Leverage is expressed as a ratio and is based on the margin requirements imposed by your broker

Type of Leverage

50 : 1 100 : 1  200 : 1
300 : 1 400 : 1 Or More

  • Using a ratio of 100:1 as an example, means that it is possible to enter into a trade for up to 100 dollars for every dollar in the account.
Understanding Forex Leverage

  • Margin is like a deposit or collateral provided to your broker in order for you to trade. Margin per trade required depends on the type of leverage and currency pair.
  • On a leverage of 100:1, a margin of $1000 allows you to trade up to $100,000 unit worth of currency.

  • Good news is that margin required is automatically calculated. Your broker will not allow you to open a trade if you do not have enough initial margin.
  • As a rule of thumb, it is good to utilise not more than 30% of your deposit as margin so that you have sufficient funds for rainy days.
  • We recommend a leverage of not more than 100: 1 for your account.
  • To find out more on margin for different leverage do check with your broker as different broker require different margin

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