If you have just entered the world of forex and hearing about the word “leverage” being tossed around, this piece of information on leverage in the context of forex trading will be useful to you in more than just a way.

Leverage is an important concept in foreign exchange trading and it is highly recommended that you know exactly how leverage works and how you can make the best out of leverage. In easy words, leverage is the ratio of invested capital related to actual value of the trade. It is worthwhile to note that forex brokers, generally, provide their clients an option to trade on the borrowed capital.

Let us understand this concept with the help of an example.