Understanding Leverage and Margin in Forex.
One of the key attractions of Forex trading is leverage, the ability to control a large position with a smaller amount of capital. For example, if your broker offers 1:30 leverage, you can control $30,000 position with just $1,000 is the margin requirement, and the broker effectively lends you the rest.
While leverage can amplify profits, it also magnifies losses. A small price movement against your position can wipe your margin quickly. That’s why risk management is essential, using stop losses, setting realistic trade sizes, and never over leveraging. For most beginners, leverage should be avoided especially in CFD assets and brokerage.