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What is Leverage ??

 
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Author What is Leverage ??
Exness Official
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Joined: 17 Jun 2015
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Post: #1   PostPosted: Tue Jul 07, 2015 4:29 pm    Post subject: What is Leverage ?? Reply with quote



The textbook definition of “leverage” is having the ability to control a large amount of money using none or very little of your own money and borrowing the rest.

For example, to control a $100,000 position, your broker will set aside $1,000 from your account. Your leverage, which is expressed in ratios, is now 100:1.

You’re now controlling $100,000 with $1,000.

Let’s say the $100,000 investment rises in value to $101,000 or $1,000. If you had to come up with the entire $100,000 capital yourself, your return would be a puny 1% ($1,000 gain / $100,000 initial investment).

This is also called 1:1 leverage. Of course, I think 1:1 leverage is a misnomer because if you have to come up with the entire amount you’re trying to control, where is the leverage in that?

Fortunately, you’re not leveraged 1:1, you’re leveraged 100:1. The broker only had to put aside $1,000 of your money, so your return is a groovy 100% ($1,000 gain / $1,000 initial investment).

Now do a quick exercise. Calculate what your return would be if you lost $1,000.

If you calculated it the same way like I did, which is also called the correct way, you would have ended up with a -1% return using 1:1 leverage and a WTF! -100% return using 100:1 leverage

Now to save your account from a big loss broker plays an integral part where they hedge to save your money or they close your position with little margin left so that you do not loss more . My broker Exness Page on exness.com helps with that. Also I share analysis in facebook for traders do see my facebook page Exness Forex.
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ninjadude
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Joined: 29 Jan 2013
Posts: 128

Post: #2   PostPosted: Tue Jul 07, 2015 6:54 pm    Post subject: Reply with quote

ADMIN ALERT:-this exness person is busy marketing his site and brokerage business on icharts under the guise of some education .if its an agreement with icharts then i have no say but a

A simple search revealed that this russia incorporated /new zealand brokerage people are bogus with hoards of complaints with their service.

http://www.forex-broker-rating.com/comments/exness

beware mareez
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amitagg
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Joined: 01 Oct 2013
Posts: 4556

Post: #3   PostPosted: Tue Jul 07, 2015 9:10 pm    Post subject: Reply with quote

well said comment though

in Nov last when crude capsized after OPEC decision..... basis some 27 in 30 days profit in crude ( and even false trades or supposedly erroneous trades turning ultimately profitable ) and monthly profits in few earlier months, you shall recall I went against the tide like a king and came out like a pauper. just leverage not borrowed capital.

so to say disproportionate faith in money mind system analysis what you call.

today same crude falling like ninepins giving trendy profits......

but yes very well said if my broker were to limit my margin ( out of my own funds but disproportionate to previous average trading
positions) i would have saved all my 'profits'.

just food for thought..... how many retail have inbuilt system restriction besides qnty etc and whether we override the system....
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pkholla
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Joined: 04 Nov 2010
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Post: #4   PostPosted: Wed Jul 08, 2015 9:46 am    Post subject: EXNESS INFO-MERCIALS Reply with quote

This Exness person seems to be issuing 'Info-mercials' about his Exness forex trading site
Exness-bhai, please take out ads in ICharts instead and save us the trouble of separating opinion from PR. Also it will improve IC finances
Prakash Holla
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apka
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Post: #5   PostPosted: Wed Jul 08, 2015 1:14 pm    Post subject: Reply with quote

Common trait
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