High Risk Investment Warning: Trading FX/CFDs on margin carries a high level of risk, and may not be suitable for all investors. Leverage can work against you. Before deciding to trade FX/CFDs offered by FXCM Australia Pty. Limited ("FXCM AU" or "FXCM Australia") you should carefully consider your objectives, financial situation, needs, and level of experience. By trading, you could sustain a loss in excess of your deposited funds. Before trading FX/CFDs you should be aware of all the risks associated with trading FXCM products and read and consider the Financial Services Guide, Product Disclosure Statement, and Terms of Business issued by FXCM AU. FX/CFDs products are only suitable for those customers who fully understand the market risk. FXCM provides general advice that does not take into account your objectives, financial situation or needs. The content of this website must not be construed as personal advice. FXCM recommends you seek advice from a separate financial advisor. For any questions or to obtain a copy of any documents, contact FXCM at [email protected] FXCM AU is regulated by ASIC [AFSL 309763]. FXCM AU ACN: 121934432.
In the world of trading, it means you can access a larger portion of the market with a smaller deposit than you would be able to via traditional investing. This gives you the advantage of getting greater returns for a small up-front investment, though it is important to note that traders can be at risk of higher losses when using leverage. In finance, it is when you borrow money, to invest and make more money due to your increased buying power. Once you return what you borrowed, you are still left with more money than if you had just invested your own capital.
All forex trades involve two currencies because you're betting on the value of a currency against another. Think of EUR/USD, the most-traded currency pair in the world. EUR, the first currency in the pair, is the base, and USD, the second, is the counter. When you see a price quoted on your platform, that price is how much one euro is worth in US dollars. You always see two prices because one is the buy price and one is the sell. The difference between the two is the spread. When you click buy or sell, you are buying or selling the first currency in the pair.
This way, if 1:500 leverage is used, a trader would be making 500 USD instead of 1 USD. It is of course important to state that a trader can lose the funds as quickly as it is possible to gain them. Now as we have understood the definition and a practical example of leverage, let's take a more detailed look at its application, and find out what the best possible level of gearing in FX trading is. Admiral Markets offers varying leverages which are dependent on client status via Admiral Markets Pro terms.
Currencies are traded on the Foreign Exchange market, also known as Forex. This is a decentralized market that spans the globe and is considered the largest by trading volume and the most liquid worldwide. Exchange rates fluctuate continuously due to the ever changing market forces of supply and demand. Forex traders buy a currency pair if they think the exchange rate will rise and sell it if they think the opposite will happen. The Forex market remains open around the world for 24 hours a day with the exception of weekends.
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