Tuesday, October 13, 2009

Comparison in the leverage

If you are asked like "Why do you want to trade forex using the forex margin trading?", the most answers must be "That is because I can enjoy the higher leverage effect on it." The high leverage ratio should not be a risk itself for all the investors. This reason is that the market risk in the forex market is dependent on the size of your position regardless of the leverage ratio. There exists another risk when the leverage ratio is too low because it should be difficult for most investors to cut loss easily. In addition, you have to place more deposit for the margin account to trade forex when you choose the lower leverage, and you will lose more money than you expect if you hesitate to cut loss. In adverse, the higher leverage would provide you for various choices in ways to trade forex, and then, you cannot say that the higher leverage should bring about more risks to you. If you feel uneasy against the forex margin trading with higher leverage, you had better invest other instruments but forex.

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