High Leverage Brokers in 2022

What is Leverage?

In forex, leverage can be defined as the act of borrowing money from your broker to invest in a currency pair. Forex traders often use high leverage with the aim of magnifying the returns from favourable price movements. When you use a certain amount of leverage, you make a deposit, known as broker margin, that gives you more exposure to an underlying currency pair. It’s like you are putting in a small part of the total trade value from your pocket and your broker is giving the rest to you.

While we are talking about magnifying profits with the use of leverage, it is also important to mention that it’s a double-edged sword because the chances of making profits at forex trading are equal to that of making losses. So, if you are thinking that leverage can magnify your profits, don’t forget that it can also magnify your losses.

Why Traders are interested in High Leverage?

Most often, you will see experienced traders making use of high leverage. Though new traders are also interested in high leverage, they must first gain some experience and trade without leverage for some time. If you know how to use leverage properly, it can prove to be a powerful trading tool for you. Here are a few benefits of using high leverage that you must know.

Enhanced Profits:

When you are using leverage, you will only have to invest a small portion of the total value of your trading capital to receive the same profit as you would have received in conventional trade. But that the profits are calculated in accordance with the full value of your position, margins can multiply your returns on successful trades. It can either be profits or losses.

Shorting:

By using leveraged products to keep an eye on the price movements, you can take advantage of the markets that are falling and rising by shorting. You will just have to be apt with your market analysis to make the right decision.

Free Up Capital:

When you use leverage, you require a small amount to put at risk per trade. This means that you will be able to save your money for your future trades and can still make big profits today.

Risk Associated with Leverage in Forex Trading:

Well, it’s true that leverage can provide a number of benefits to traders. It does have some risks associated with it that you must consider in order to make informed decisions.

Magnified Losses:

As mentioned before, the chances of making profits in the forex market are equal to that of making losses. So, if you can make magnified profits using leverage, you can also make magnified losses even if you have invested a small amount to trade.

Margin Calls:

If a trade goes against you, even your high leverage broker would ask you to put in more funds to let you keep your trades open, which is called a margin call. You will either have to put in more money or close your trading position.

Charges:

Your broker lends you money so that you can open the full position at the cost of your deposit. If you let your position open overnight, your broker will charge you for that.

Bottom Line:

If you search around, you will see that there are so many high leverage brokers that promise to deliver great services to their clients but not all of them prove worthy of their words. The brokers listed above are good for many traders. But if you are planning to use any of them, we suggest testing them on your own so that you can make an informed decision.