Leverage is an integral tool in every forex trader’s arsenal.
Traders are attracted to the forex market due to its inherently low volatility and the ability to magnify that volatility as necessary using leverage.
Leverage is trading with borrowed capital, allowing a trader with a relatively small account balance to open up much larger positions than they would otherwise be able to.
For example, using leverage, a trader with just $1000 USD of capital could open up a $10 000 USD position and potentially generate 10 times as much profit if the market moves in their favour.
As the forex market generally moves less than 1% per day, leverage is essential to generating significant trading results.