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Let's say a trader has 1,000 USD on their trading account. A regular lot of '1' on MetaTrader 4 is equal to 100,000 currency units. As it is possible to trade mini and even micro lots with Admiral Markets, a deposit this size would allow a trader to open micro lots (0.01 of a single lot or 1,000 currency units) with no leverage put in place. However, as a trader would usually be looking for around 2% return per trade, it could only be equal to 20 USD.
In the previous USD/JPY example, between 2005 and 2006 the U.S. Federal Reserve was aggressively raising interest rates from 2.25% in January to 4.25%, an increase of 200 basis points. During that same time, the Bank of Japan sat on its hands and left interest rates at zero. Therefore, the spread between U.S. and Japanese interest rates grew from 2.25% (2.25% - 0%) to 4.25% (4.25% - 0%). This is what we call an expanding interest rate spread.
The use of leverage basically exacerbates any sort of market movements. As easily as it increases profits, it can just as quickly cause large losses. However, these losses can be capped through the use of stops. Furthermore, almost all forex brokers offer the protection of a margin watcher – a piece of software that watches your position 24 hours a day, five days per week and automatically liquidates it once margin requirements are breached. This process ensures that your account will never post a negative balance and your risk will be limited to the amount of money in your account.

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In contrast, when a trader opens a position that is expected to last for a few minutes or even seconds, they are mainly aiming to extract the maximum amount of profit within a limited time. What is the best forex leveraging in this case? Usually such a person would be aiming to employ high, or in some cases, the highest possible leverage to assure the largest profit is realised, while trading small market fluctuations.

If you're feeling inspired to start trading, or this article has provided some extra insight to your existing trading knowledge, you may be pleased to know that Admiral Markets provides the ability to trade with Forex and CFDs on up to 80+ currencies, with the latest market updates and technical analysis provided for FREE! Click the banner below to open your live account today!
Investing in CMC Markets derivative products carries significant risks and is not suitable for all investors. You could lose more than your deposits. You do not own, or have any interest in, the underlying assets. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. Spreads may widen dependent on liquidity and market volatility.

Between 2003 and the end of 2004, the AUD/USD currency pair offered a positive yield spread of 2.5%. Although this may seem very small, the return would become 25% with the use of 10:1 leverage. During that same time, the Australian dollar also rallied from 56 cents to close at 80 cents against the U.S. dollar, which represented a 42% appreciation in the currency pair. This means that if you were in this trade – and many hedge funds at the time were – you would have not only earned the positive yield, but you would have also seen tremendous capital gains in your underlying investment. 
Investing in CMC Markets derivative products carries significant risks and is not suitable for all investors. You could lose more than your deposits. You do not own, or have any interest in, the underlying assets. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. Spreads may widen dependent on liquidity and market volatility.

Advanced live charts for forex trading are free and easy-to-use at ForexLive. These real-time charting packages let you apply technical analysis to hundreds of FX pairs. The charts update live and and default to candlestick charts to help you trade foreign exchange. Your forex broker may have charts that don't update as quickly or have advanced features like at ForexLive where charts provide short-term or long-term opportunities for technical analysis. Use the live trading charts along with news and education to trade on currencies like the euro, yen and US dollar.

Advanced live charts for forex trading are free and easy-to-use at ForexLive. These real-time charting packages let you apply technical analysis to hundreds of FX pairs. The charts update live and and default to candlestick charts to help you trade foreign exchange. Your forex broker may have charts that don't update as quickly or have advanced features like at ForexLive where charts provide short-term or long-term opportunities for technical analysis. Use the live trading charts along with news and education to trade on currencies like the euro, yen and US dollar.

For retail clients, leverages of up to 1:30 for currency pairs and 1:20 for indices are available. For professional clients, a maximum leverage of up to 1:500 is available for currency pairs, indices, energies and precious metals. Both retail and professional status come with their own unique benefits and trade-offs, so it's a good idea to investigate them fully before trading. Find out today if you're eligible for professional terms, so you can maximise your trading potential, and keep your leverage where you want it to be!


For retail clients, leverages of up to 1:30 for currency pairs and 1:20 for indices are available. For professional clients, a maximum leverage of up to 1:500 is available for currency pairs, indices, energies and precious metals. Both retail and professional status come with their own unique benefits and trade-offs, so it's a good idea to investigate them fully before trading. Find out today if you're eligible for professional terms, so you can maximise your trading potential, and keep your leverage where you want it to be!
Map out the magnitude of price moves with Retracements and Arcs. These tools let you draw studies about the possible developments of a price based on its previous move. It can be calculated following different mathematical concepts (Fibonacci, Gann…). While retracements are concerned with just the magnitude of moves, Arcs factor both magnitude and time, offering areas of future support or resistance that will move as time progresses. How to add Retracements and Arcs
When scalping, traders tend to employ a leverage that starts at 50:1 and may go as high as 500:1. Knowing the effect of leveraging and the optimal leverage Forex trading ratio is vital for a successful trading strategy, as you never want to overtrade, but you always want to be able to squeeze the maximum out of potentially profitable trades. Usually a trader is advised to experiment with leverage within their strategy for a while, in order to find the most suitable one.
Financial leverage is essentially an account boost for Forex traders. With the help of forex leveraging, a trader can open orders as large as 1,000 times greater than their own capital. In other words, leverage is a way for traders to gain access to much larger volumes than they would initially be able to trade with. More and more traders are deciding to move into the FX (Forex, also known as the Foreign Exchange Market) market every day.
Another tool you can use is our significative line crossing systems, including crossing averages, MACD cross and over zero signal. Such as the indicators that detect patterns in Japanese Candlesticks (see above), the correct selection of your parameters are vital to avoid to be guided in your decisions by misleading signals. How to add crosses indicators
In addition, there is also no interest on leverage, instead, FX Swaps are usually what it takes to transfer your position overnight. However, unlike regular loans, the swap payments can also be profitable for a trader. To sum up, leverage is a tool that increases the size of the maximum position that can be opened by a trader. Now we have a better understanding of Forex trading leverage, let's see how it works with an example.
It’s easy for new traders to spend a lot of time researching which trading platform to use or looking for the latest technological solution. The reality is a new trader doesn’t really know what they are going to need until they uncover their trading style. This means it’s better to begin with the basics and focus on learning enough to get started with a minimum of risk.
Our trading charts provide a complete picture of live currency, stocks and commodities price movements and underpin successful technical analysis. Identify patterns and trends and respond to price action more effectively by typing in your chosen asset and applying moving averages, Bollinger Bands and other technical indicators to enhance your trading.
GBPJPY is the most confusing one in all the JPY-related pairs. It seems that very hard for it to rise up to last top on weekly chart. It closed with a weak warning bearish weekly signal last week. On this daily chart, it could drop down more after breaking through the blue short-term daily trend line. And the 3rd wave could drop down to next support which is also...
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