Leverage and Liquidity in FOREX trading

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One of the hallmarks of FOREX trading is leverage and liquidity. Because some FOREX trading companies offer leverage, a FOREX trader can make big profits while keeping thier capital risk low. For example, a FOREX trader trading through a FOREX company that offer a 100 to 1 leverage, the FOREX trader can have a $100 margin deposit, which would allow a trader to buy or sell $10,000 worth of currencies.

The high level of liquidity in the FOREX market is a result of the size of the FOREX market. Because you can buy and sell FOREX currencies any time you want 24 hours a day, you can always close a positon whether you have reached your profit target or of you are losing in the trade.

*Without proper risk management, a high degree of leverage can lead to large losses as well as gains.


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Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts