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Leverage Explained
To leverage a position is to trade on margin allowing a lower level of deposit to be committed to an individual trade. Many investors use it as a way of increasing their trade values and therefore potential gains. With the latter, higher potential gains also mean higher potential losses and therefore we adopt a strict policy of utilising stop losses to limit our clients’ capital exposure.
The suitability of utilising leverage is dependant on an individual’s attitude towards risk. Forexmax will discuss the potentially positive and negative impact of leveraging a position with new clients. All Forexmax clients must be willing to adopt 3:1 leverage on trades although many will be placed at 1:1 dependent on the fund managers' views.
Leverage is applied per position/ currency pair. Therefore, you will be geared to a higher level depending on the number of open positions at any one given time.
Example: Program 1
3:1 leverage
Client deposits 100,000
Trade amount 300,000
4 Open positions 1,200,000 Total exposure
Total leverage x 12
Please note that Forexmax enforce stop losses to give an added layer of comfort.