The power of Leverage

Lets take for example 50:1 leverage this means for every $1000 you can control $50,000 this of course will magnify your gains and losses so should be used carefully. I explain risk management techniques in my E-book How To Trade Forex.

your country of residency.

Trading a pair

In currency trading you are always trading a pair, its one currency the base currency against the quote currency. If you went long (buy) EUR/ USD then you are buying Euros and Selling US Dollars, you cannot just say buy Euros.

Bid price: The bid price (SELL) is what the broker is willing to pay for the base currency in this example 1.18816

Ask price: The ask price (BUY) is the rate at which a broker will sell the quote currency. The ask price is always higher than the bid price in this case 1.18831

Spread: The difference between the ask price and the bid price, which allows the broker to earn a commission on your trade. After you cover the spread between the bid and ask prices, you can start making a profit on your position. (Spread = Ask price minus  Bid price). Tighter the spread the better.

Overall currencies do not move in large percentages but what exaggerates the moves is the use of leverage. A 0.5% daily move when you have 100 x leverage becomes magnified.

A beginner’s guide to trading the Forex market using Digital Options and CFDs with the MT5 platform by Vince

Stanzione