Below are examples of how leverage works in forex trading:
Forex Trader A has $5,000 USD:
If the leverage of Forex Trader A's account is 10:1 and they wish to use $1,000 on one Forex trade as a margin, the leverage will help increase the proportion of the margin. ($1,000) = 10 x $1000 = $10,000 (trade value).
Forex Trader B has $5,000 USD:
If the leverage of Forex Trader B's account is 100:1 and they wish to use $1,000 on one forex trade as a margin, the leverage will help increase the proportion of the margin. ($1,000) = 100 x $1,000 = $100,000 (trade value).
