Thread: Spread and leverage

We traders are very well known with these two terms. However; for the new babies it is essential to understand the importance of these terms. Spread is a form of broker's income which represents the difference between bids and asks price of a currency pair. The lower the spread, the better it is for a trader. And leverage shows the effective amount that a trader can borrow from his trading platform against initial margin in his accounts. The greater the leverage the better it is for a micro trader.

Spread and leverage are the two important terms that we currency traders may hear in majority of discussions and there are almost millions of posts regarding these topics. I am happy that my broker AAFX is providing me a high leverage of 1:2000 meaning that in maximum I can borrow $2000 against $1 in my trading account as initial margin. And I am receiving lowest zero spread that is my transaction costs in terms of spread is zero actually.

I don't quite agree that a large leverage helps to make good money. It just seems that your deposit has increased, though in fact chances to drain your deposit have increased in the same proportion. I cannot recommend a high leverage to anyone.

Couldn't agree more. Large leverage is a recipe for disaster. I would say 1:200 is ok. 1:400 is still fine depending how you trade.

Yes, many traders just confuse these terms and try to work them out. More theoretical knowledge is required. The marging level can really help in trading but, at the same time, risks will also increase.

Originally Posted by alexandro

I don't quite agree that a large leverage helps to make good money. It just seems that your deposit has increased, though in fact chances to drain your deposit have increased in the same proportion. I cannot recommend a high leverage to anyone.

I think high leverage i very good especially if you have good strategy, with a good strategy, everything is okay, it gives you the chance to make even much money with just less coins. these are a list of brokers with high leverage.
1. FreshForex :1:2000
2. Fx glory 1:3000
3. fbs 1:3000