One of the reasons for the popularity of Forex among traders compared to other financial instruments is the possibility of using large leverage. Despite the widespread use of the term “leverage”, few people understand its true meaning and impact on trade.
What is leverage?
Leverage allows traders to use borrowed funds to purchase an investment instrument.
Interest rates of the central banks of the largest world countries are the basis for trading on the Forex market. It is the dynamic changes of this indicator that determine the majority of price fluctuations arising in the course of trading. Interest rates are influenced by both global political and economic factors and domestic events.
Trader’s Economic Calendar is a universal tool that allows a trader to always stay abreast of upcoming and current events in the world of finance, economy and politics. Forex trading processes are largely determined by factors that do not need to be predicted or subjected to complex calculations – it is enough to know the dates and times of important economic events.
In the classical definition, a market maker in exchange trading is a financial institution (firm) that undertakes to provide liquidity of a certain share at the exchange. These are mainly large banks, brokerage companies and dealing centers. A market maker is literally a “market maker”, he is involved in the market process in order for the market to be viable.
The use of leverage is an opportunity to increase the volume of investment at the expense of credit funds borrowed from a broker. For this loan, the funds in the trader’s account, called margin, are used as collateral.
The amount of credit funds available to a trader is determined by the broker’s margin requirements.
