High Leverage means High-Risk

Forex trading is known for providing high leverages, meaning you can get profit/loss exposure multiple times of your trading capital. Forex brokers allow leverage of as high as 200:1, so you need to have only $1 to take a forex position worth $200.

So while a trader can profit from the leverage, his risks of losses are also maximized. Thus currency trading can easily become a loss-making nightmare unless the trader takes calculated leverage and has strong money management in place.

One of the worst consequence of this is receiving a margin call from your broker.

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