This kind of loan that the broker gives a trader to make a deal with much more volume than the funds in their account allows. Credit is "issued" at the opening of the transaction, and is finalised at the close of a position. Leverage come in different sizes: 1:20, 1:50, 1:100, 1:500 and 1:1000. It is necessary to almost every trader because the minimum size of a transaction on the Forex market (see) is 1 lot (see), which is equal to 100 thousand currency units - such as dollars. Agree, that this is a quite tangible amount. Therefore, for a period of one transaction broker gives a loan of the amount. For example, you decide to open a transaction with the volume of 1 lot. If you have chosen Leverage 1:20, the actual amount from your account that will be used in the transaction is one-twentieth part of the 100,000 - ie 5000. The remaining amount you give the broker. Accordingly, if the leverage is 1:50, then 2000 dollars from your account will be used in the transaction, 1:100 then one thousand, 1:500 allows you to trade a whole lot with only 200 dollars, and the leverage 1:1000 allows you to trade on the marker with only 100 dollars.
Trading in financial markets involves substantial risks, including complete possible loss of investment capital. This activity is not suitable for all investors. High leverage increases the risk (Risk Disclosure).