How is Forex Trading Leverage Calculated? - How to Calculate Leverage in Forex Trading
Forex trading leverage is calculated based on a ratio. Ratio can be 100:1 or 50:1 or 10:1.
For 100:1 leverage ratio it means 1:100 leverage option means a trader can borrow $100 dollars from their forex broker for every $1 dollar in their forex account, therefore a trader with a deposit of $1,000 can borrow up to $100,000 from forex broker - ($1,000*1:100 which is equal to $100,000). One can then use this borrowed capital to open forex trades with.
For 50:1 leverage ratio it means 1:50 leverage option means a trader can borrow $50 dollars from their forex broker for every $1 dollar in their forex account, therefore a trader with a deposit of $1,000 can borrow up to $50,000 from their forex broker - ($1,000*1:50 which is equal to $50,000). One can then use this borrowed capital to open forex trades with.
For 10:1 leverage ratio it means 1:10 leverage option means a trader can borrow $10 dollars from their forex broker for every $1 dollar in their forex account, therefore a trader with a deposit of $1,000 can borrow up to $10,000 from their forex broker - ($1,000*1:10 which is equal to $10,000). One can then use this borrowed capital to open forex trades with.
To Learn More about Forex Leverage and Margin - Read the Topics Below:
Forex Leverage & Margin Described
