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Guys i am planning to open a new forex real account but i am unable to understand what is the meaning of leverage 1: Boss i cannot understand what u said Or can someone explain it step to step clearly???? To understand leverage you first need to have an idea of what you are trading.

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In forex you will be working with "lots" of a certain currency. This is why you will be working with lots through your broker whoever you are opening you account with.

You can consider "leverage" as a loan which your broker is making you in exchange of a small sum what you will be funding your account with of money. The leverage depends on the broker, and then on your account's settings. Example of leverage In the case of My recommendation is to go through the learning courses that they offer here at babypips.

In the first section you will get a clear idea of what leverage means and how to relate it to the size of your account and be able to calculate potential profit and loss. This is just flat wrong when talking forex or futures, but more or less correct for stocks.

Your broker isn't loaning you anything. Regarding seeing leverage as loan its just figurative speech.

Actually they use this example in the school of pipsology. Here is the link and here is how they describe it:.

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I do understand that no one is lending you money but this is a nice beginners approach just to get the idea of what leverage means. I also recommend you to follow this link Karthik Look under the concept of leverage and continue on with the chapter to get a clearer idea:. We could get into a semantical discussion on "front" vs. In spot forex trading you never actually buy or sell anything, you just agree to do so in the future like in the futures market , with that agreement getting rolled forward daily so you never actually have to fulfill your agreement to do the currency exchange.

Since no currency ever actually changes hands, there is no fronting or loaning or anything like that. Margin is simply surety that if the position goes against you the broker doesn't end up footing the bill for your losses.

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If I've noticed anything about the Forex so far, it is the fact that Forex should be kept simple. I have one question, not so much regarding "what is leverage" as I understand the above. Say I used my entire margin of Welcome to the forum, but please don't bump threads in which the previous post was 4 years ago just to say "thank you" to people.

When people do that, it means those threads occupy a front-page position, displacing something else more relevant and current. Most sensible people would not argue the semantics between "fronts" and "loans" when it comes to the the clear context. Since the explanation is given to avoid technical jargon in the first place, the statement of expalnation need not be technical, becasue the whole point of the explanation, is to avoid technicalities in order to simplify a concept.

From an academic perpective, consider the Historical Jesus who was recorded as giving parables that have no "direct" or "exact" relationship to the topic He was trying to ilustrate.

Yet the parables nonetheless served as the perfect illustration for those who were not au fait with such ideas. Thus, if somebody today uses a parable or similar simplified illustration that describes the trading concept of Therefore, in this instance it helps to have common sense, and let ones ego get in the way sinse nobody likes a nit-picking, sematic-bashing, smart-ass that really knows jack.

Simple and straight to the point. Here is the link and here is how they describe it: Look under the concept of leverage and continue on with the chapter to get a clearer idea: What is meaning of leverage 1: Hello Karthik, If I've noticed anything about the Forex so far, it is the fact that Forex should be kept simple.

So, in simple terms, your question of 1: