Act with leverage
Acting with a lever, or with margin, allows the trader to open positions that are greater than his / her own capital allows him / her. For most Forex pairs, the maximum leverage that can be applied is 400: 1, which means that for every $ 400 value in the position the trader must invest $ 1 from his account. This means that if the trader wants to buy 10,000 units of EURUSD for the price of 1.2356, he / she will only have to pay $ 30.89 instead of $ 12,356, which is 0.25% of the price, or a ratio from 400: 1. It is important to remember that the profit and loss are determined by the position size, and the lever trade can enlarge both the profit and the loss.
What affected the Forex market?
The Forex market has high liquidity because of the large demand and supply ratio. Traders conduct transactions based on financial and general events. When a currency has high demand, its value will naturally rise against other currencies, and vice versa.
Financial events are frequent statements by countries, central banks or other financial institutions, on topics such as unemployment figures, production figures and so on. A fall in the unemployment figures of a country may mean that the economy is strong and this can lead to an increase in the local currency. If this is a sharp decline, it can also affect other currencies. Before the event occurs, traders speculate on its contents, and open positions based on these speculations. All events can be viewed and followed on the economic calendar.
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