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04 - What is leverage? - easyMarkets - Education

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  • Published on Nov 12, 2012 veröffentlicht

Comments • 160

  • kebman
    kebman 4 years ago +12

    The *Golden Rule* within trading is ... _never_ take up a loan in order to trade. The broker takes profit _first_ thus you stand to lose everything you invested, _including_ your margin, if your trade goes south.
    But yes, if you do everything right, there's also a chance of profit. I say "a chance" because doing everything right is exceedingly difficult for most people. Even seasoned traders takes a few losses every once in a while - in fact good traders plan with losses in mind. Also consider that 70-80% of traders actually _lose_ money.
    So make sure you don't lose more than you can afford by simply refusing to invest with leverage. Consider leverage reserved for people with a proven track record, and a win/loss ratio of alot more than 50/50.

    • I Eat Trolls For Breakfast
      I Eat Trolls For Breakfast 3 months ago

      Also this goes for real estate "investments". Never call real estate an investment.
      Levaged is basically dirt poor.
      A hypocrisy present with making money off loaning money.
      Getting someone else to pay for your mortgage is banking fraud. It's rob Peter to pay paul. It's Get Peter to pay Paul's mortgage. Frankly cruel to rent the American dream.
      Also I need a intrest free loan to buy a home, and Levaged investor would negate that financial possibility. Block me. Because raising interest rates to stop levaged investor ALSO stops me.
      Also mathematically only 1% can be landlords, with 25% of the population being renters, and the average landlords owning 20 properties, equals only 1% can be landlords. Even with 100% everyone renting and the average landlords owning 20 properties, that's a max 5% can be landlords.
      So it would be impossible math to get into real estate "investments". You would make the 1% become 5%. Ending the American dream. That's the 1%'s job.
      . And it would collapse loaning money. Basically a unwanted third-party lending. That's the 1%'s job.
      Politely saying math equations or sugar coating math equations doesn't change the math equation. "Income stream" or "passive income" or call it "predatory lending". Math doesn't care. Sugar coating it is for con men. A bait-and-switch con. Replacing "predatory lending" with "income stream".
      #FBI

  • Oaksoe Pyei
    Oaksoe Pyei 8 years ago +19

    Very clear explanation for the first time traders. Thank you guys.

  • no name
    no name 4 years ago +2

    Thanks for this video. It's very well explained. I can calculate your examples without any problems, but I do have an issue with the reasoning behind it. We have invested euros into US dollars. The rate changed from 1.3130 to 1.3140, meaning that now is euro even stronger compared to dollar than it was before. So have come we made profit and didn't lose money? I don't know if I am understanding the message correctly because english is not my first languege . I hope my concern makes sense. Thanks again.

    • Hamdan Zahid
      Hamdan Zahid 2 years ago

      As jeffery said above, He was to LOSE 10 pips if he were Holding USD.

    • Jeffrey Luzon
      Jeffrey Luzon 4 years ago

      He was holding euros, not usd so he made 10 pips when he sold it for usd

  • GiantZero
    GiantZero Year ago +2

    Leverage. I used leverage through a bank loan based on deposit. What I did is I borrowed around 1000 euro and I took credit based on deposit, what that means is for my 1000 euro I had to put aside another little more than 1000 euro as a guarantee for the loan, BECAUSE I'm unemployed right now. So, from 1000 euros they became 2000 but I can only use half of it. I took the 1000 euros (with a maturity date on the loan 7 years from now) and invested them in single stock I believe in. I will get enough time in those 7 years to ride the stock market good or bad and in meantime dividends will compensate my loan interest which is 2% here in my country in Europe. And if price appreciation happens together with dividends, I will rock the bank from its foundation.

  • 2025Lax
    2025Lax 9 years ago +11

    finally something useful and easy to learn about leverage~~~

  • ahsanullah shanto
    ahsanullah shanto 5 years ago +1

    Leverage involves borrowing a certain amount of money. In the case of forex the money is borrowed from broker. Usually a trader goes for a high leverage providing broker. As a high liquid broker I always rate Trade12 because with the broker I have flexible high leverage like 1:400.

    • SLEEP WALKER
      SLEEP WALKER Year ago

      So it best to use margin account to make more money

  • 0yh9
    0yh9 5 years ago +2

    Here, I get confused. If I can multiply my profits as well as losses by using a leverage, how about the lot size? I can see like both can multiply the profits as well as losses. Help me in this

  • Souvik Ghosh
    Souvik Ghosh Year ago

    NICELY EXPLAINED.

  • IntenseTwitch
    IntenseTwitch Year ago

    Does CFD platform affect the stock when the leverage is 1:1 ?

  • Retsenoj
    Retsenoj 5 years ago

    very informative. thank you

  • Thiago Vieira
    Thiago Vieira 8 years ago +18

    best video explaining leverage...
    Thanks Guys

  • Hans Yasinì
    Hans Yasinì 3 years ago +35

    What is a good strategy and how do you do analysis which turns into profits?

    • VENIM INSURANCE
      VENIM INSURANCE Year ago

      My idea of financial market online is risky and like a gamble but from your perspective I’ve come to understand it’s quite easier than that and just takes coordinated guide and expertise. Thanks I’m definitely giving it a try

    • Wall Street dreams
      Wall Street dreams Year ago

      Priorities may vary depending on the dealer, but the trust and honesty of a brokerage firm are very important to me. I have been working with Sir Bruke since 2018. At first my anxiety did not work, I lost money several times. But being a person with some patience, I managed to raise a lot of money recently. The brokerage never gave me problems with withdrawals. The company just approved my documentation and withdrawal of $16,300 without any problems. Thank you, Sir Eddy, I will stick with you for a long time! I wish you success!

    • Stacies theSpacegirl
      Stacies theSpacegirl Year ago

      The biggest advantage of this way of earning money without a doubt would be the little time it requires. Being a college student, my time is very long, so I can not lose my focus on studies for a long time. I’m trading using his way and now everything has run smoothly and without stress! The yield is very good: I got my financial freedom and I no longer need to cut expenses.

    • Rosaria De Santos
      Rosaria De Santos Year ago

      Eddybruke(.)info

    • Flight Therapy **BullisticFPV**
      Flight Therapy **BullisticFPV** Year ago +4

      hahahaha well thats the billion dollar question isnt it lol Wouldnt it be great if a random person on youtube would just give you that strategy? haha

  • TheMustang064
    TheMustang064 2 years ago

    good explanation. Thank you

  • Gangus Khan
    Gangus Khan 3 years ago +3

    Just trade the 1:1 leverage.. best way to make your money.
    Your just giving the broker the advantage with the leverage.
    1.00 for every pip best way to do it.

  • T
    T 2 years ago +2

    I'm confused 😕 how in the example did he make a 10 pip profit what if instead of it being 1.3130 it went up 1.3150 is that a 20 pip profit??

  • Limitless 1
    Limitless 1 3 years ago +5

    If you want to make money
    Don't use leverage.

  • wedgythewedges
    wedgythewedges 7 years ago +1

    would like to ask that, if i invest 500usd and with most of the trades of 0.01 lot, is 1:400 leverage ok? i not sure if leverage is affect if i always trade 0.01 lot,

  • fredsk877
    fredsk877 6 years ago +5

    thanks for the info! dumb beginner question but am I understanding this correctly?.... If I were to open a position with 100 dollars for instance, and I have 10:1 leverage, it means I am trading with 1000 dollars - so if I invest this in a stock because I think the value will go up (and it does) all I have to do is close the position, the broker gets their investment back and I make more profit than I would have done if I hadn't used leverage. What happens if I open a position with the same investment/leverage and the stock price drops dramatically? Could I potentially end up loosing an entire 1000 dollars, even though I only invested 100 dollars of my own money? If the share price dropped to almost nothing, could I not wait until the share price goes back up again before paying my broker back? Are there deadlines for returning the broker's money? If anyone could let me know, it would be greatly appreciated!

    • VoidSurf
      VoidSurf 4 years ago

      Usually, you can only lose your invested capital. This is because, first of all, you should have set up a stop loss, to limit your potential downside. Second of all, if your trading capital does reach zero, your broker will execute a margin call, and liquidate your position automatically.
      There are some situations in which it is possible to lose more than your investment capital. An example is the Euro/Swiss crash of 2015, in which the price plummeted by thousands of pips in a few minutes. People's stop losses failed, because the price dropped too quickly for the closing trade to be executed at the stop rate. Many people ended up with negative balances on their account, being held liable for the leverage they used. This was a massive crisis for many traders, and put entire brokers out of business.
      Some brokers offer negative balance protection, or guaranteed stops. This is a very important feature, because otherwise your risk is theoretically much greater than you think. Such crises aren't frequent, but when they do happen, you can lose way, way more than your invested capital if you're highly leveraged. So keep that in mind.

    • Juan Rojas
      Juan Rojas 4 years ago

      Loss*

    • Juan Rojas
      Juan Rojas 4 years ago

      You can only lose your investment, since its 10:1 leverage every 1 pip is multiplied by 10, therefore if it goes the other way and goes down 10 pips you actually are at 100 pip lose which means you lose your investment. Nothing more.

    • N3V3R KONFORM
      N3V3R KONFORM 4 years ago

      That's pretty much my question as well, in conclusion to the video.

    • King Sage Official
      King Sage Official 4 years ago

      fredsk877 good question. Curious to know the answer myself.

  • Noname Noname
    Noname Noname 2 years ago +1

    I am completely new to investment. Does leverage have any added value? Genuine question. It seems to me like a speculation tool - spot a trend, ride on it, sell before it bursts

  • Lucas Nyeinchan
    Lucas Nyeinchan Year ago

    easy to understand now ,thanks

  • Bennel cross
    Bennel cross 4 months ago +10

    I use the service of a fiduciary under a great broker, that is the most effective way I have known

    • Randy
      Randy 4 months ago

      @Bennel cross thank,l I will mail him now

    • Lithia Copper
      Lithia Copper 4 months ago

      I once dabbled in trading with 9k but was growing slowly and learnt to understand that I lack the skill cause I ended up blowing my account

    • Bennel cross
      Bennel cross 4 months ago

      Benjamin ravies (a gmai comm to get to him okay

    • Bennel cross
      Bennel cross 4 months ago

      Look up the name Benjamin ravies, that's the name of my fiduciary he trades the market for me with his expertise while I earn he charges a commission on profits

    • Randy
      Randy 4 months ago

      can you connect me to your fiduciary if it is as effective as you say because I am struggling and don't know what I'm doing in the market

  • kwibisono
    kwibisono Year ago

    Thank you!!!

  • Rahim Sterling
    Rahim Sterling 6 years ago

    Forex leverage is the best thing or option among others which provide by traders or investors brokers. This video explain leverage in a great way. I love to watch more videos like this one. Investors should be cautious about taking high leverage risk with their trades, specifically this advice is for new traders. My broker ECNCAPITAL also giving their customers the best leverage facility. But we are using this with proper plan.

  • Edwin Van der sar
    Edwin Van der sar 3 years ago +14

    I have advised some people in the past to take up trading in the forex market as full time or part-time activity.

    • Unexpected
      Unexpected Year ago +2

      @nbayoungboy a fellow real human being, how rare, thx

    • nbayoungboy
      nbayoungboy Year ago +2

      Stfu bots

    • Remi Begay
      Remi Begay 3 years ago

      Some months ago customer service wasn't the best but in the past weeks, I've not had a problem and they have efficiently solved every tech issue of mine.

    • Ralph Zimmerman
      Ralph Zimmerman 3 years ago

      There is no other forex broker in the world that performs at the 99.4% level of accuracy that Graftontradesconsult is able to hit. That’s why people from around the world trust this platform to double, triple, and quadruple their hard-earned money.

    • Faux
      Faux 3 years ago

      Hello Phelan...
      Graftontradesconsult (a) g ma il. c om... Talk to them and be amazed at what you could achieve in a short period of time

  • muttaqina sanzida
    muttaqina sanzida 3 years ago +1

    Leverage is one of the most important financial trading tools to earn huge money rapidly in Forex trading. And we the traders need to check the leverage ratio when selecting our brokers to get the right leverage facility. I prefer the high trading leverage and this is why my broker is Forex4you who is a regulated and licensed trading broker and give the flexible high trading leverage 1:1000 for earning profit rapidly.

  • Touhid Hasan Shakib
    Touhid Hasan Shakib 4 years ago

    When trading leverage is open, I'm not sure about the time of the Butte Profit

  • VaxoGIGAURI-CHANNEL
    VaxoGIGAURI-CHANNEL 9 years ago

    THANKS!!!!!!!!!!!!!!!1

  • Priya Jha
    Priya Jha 4 years ago

    Thank you

  • Forex Master
    Forex Master 6 years ago +2

    with 1:100 leverage on 100 $ which is 10,000
    and my lot size is 0.01 then
    Q.: how much #PIPS i got?
    anyone guide me

    • Piper Jones
      Piper Jones 3 years ago

      Example.
      0.01÷77.60
      ×50,000
      =64.44

    • Piper Jones
      Piper Jones 3 years ago

      0.01÷(number you're landing on) x 10,000

  • Hanz Franz
    Hanz Franz 5 years ago +3

    How to lose even more money in an even shorter amount of time - the video

  • aisimplified
    aisimplified 3 years ago +2

    Leverage is why forex maybe a scam

  • shahed alkamal
    shahed alkamal 6 years ago +1

    The most important factor in Forex is leverage. Leverage is expressed by ratio and it is on the base of margin requirements by broker. Leverage depends on broker. But you have to be wise in using leverage. You will get high leverage if you are able to maintain minimum 2% margin in your account. This is the most powerful tool to make huge profit. As a trader I prefer high leverage to make profit ECNCAPITAL.

    • Dalax
      Dalax 5 years ago

      Martin Kanchev so basicaly, if I have 200$ in my account, even if the leverage acts as if I have 2000, I cannot lose more than my 200? ( I am still fairly new to trading and it is something I wasn’t too sure about )

    • Martin Kanchev
      Martin Kanchev 5 years ago

      your initial capital is what acts as coverage in case something goes wrong. Ergo the position will be closed and you would loose it all as soon as the minus on your position reaches that level. (ex. u started with 10 bucks your position regardless of leverage cannot go more into red than those 10)
      And about the up and down it is exactly as much (50k). You will win 5 times more or loose 5 times more.(5 times more means 5 times faster if u use 2;1 leverage you would survive lets say a drop of 20 pips but if u used 4:1 it would be only 10pips and 8:1 5 pips etc.)

    • kannaiyan D
      kannaiyan D 5 years ago

      Using leverage if positive then unlimited Profit and 100% loss if negative. Here 20% You may ask Why ? answer is your contribution consider as margin and every day your margin will calculated and your margin near to zero in that case your position will be sold (MARGIN RISK) if there is no margin risk calculation then your lose will be unlimited loss.

    • speedwayman100
      speedwayman100 5 years ago

      50,000.00

    • psychospin1
      psychospin1 5 years ago +1

      This is my first time learning about these things, so I have one question if you don't mind.
      I get it that if you leverage you can get higher profits when the market goes up. But what happens if the market goes down?
      Let's take the example from the video. I invest 20k at 5:1 leverage. The property increases value of 50% so I take 50k profit.
      But what if the property decreases value in 50% instead, what happens, how much do I lose?
      Thank you in advance. Cheers

  • Nash Soul
    Nash Soul 6 years ago

    Best leverage site please ?

    • Uc
      Uc Year ago

      +1 6 0 2 4 2 8 1 2 8 9

    • Uc
      Uc Year ago

      I'm using staxcapital broker, I'll recommend it for you. It makes me profit trading with leverage.

  • Herby
    Herby Year ago

    So is there no point in using leverage unless you have the majority of your accounts capital in the trade?
    In other words, why use 1:2 leverage to trade if using 10% of your capital when you could just use 20% of your capital with no leverage.
    Am I understanding this correctly?

  • DIRIKUTETAPAKU
    DIRIKUTETAPAKU 6 years ago

    with 1:100 leverage on 100 $ which is 10,000
    and my lot size is 0.01 then
    Q.: how much #PIPS i got?
    anyone guide me

  • Oscar Martinez
    Oscar Martinez Year ago +1

    so if the housing market completely crashes and the house price is now 0, you are now 80k in debt? why would you not mention this?

  • giannis tzorbatzakis
    giannis tzorbatzakis 4 months ago

    because I'm confused,
    lets say we have the 20000$ and with the same 5:1 leverage we "have" 100000$
    if our investment has a 10% increase it goes from 100000$ to 110000$ then does the broker get 100000$ from that thus leaving us with 10000$ and we end up -10000$ or does he take 80000$(because that is the amount he lended) and leaves us with 20000$ profit?
    And also can we hold the deal as long as we want until it makes profit even if in the meantime its value went down even to the point where we weren't, at that time, able to pay off the lended money(I don't know if it is called margin money)
    thanks in advance to anyone answering

  • Andres Castillo
    Andres Castillo 3 years ago +27

    Smart men hires smarter people in the particular field for advises. It an eye opening for me and I have been able to embrace the fact. It is total waste of time to do something yourself when some professional will handling your trades the right way and generate more income.

    • johnson Levitt
      johnson Levitt 2 years ago +3

      I admire his performance. This is totally worth my time any day!

    • Andres Castillo
      Andres Castillo 2 years ago +2

      Yeah Kimothy, it is.

    • Luke Haswell
      Luke Haswell 2 years ago

      This is good Andres.

    • Mike Norman
      Mike Norman 2 years ago +3

      It has more excitement than any other business that I have been involved in.

    • Kimothy Olsen
      Kimothy Olsen 2 years ago +5

      Andres The foundation is built on lucrative features. I’m impressed with your choice of investment.

  • Spiridon Iliadakis

    what do u mean with , deal size and what do u mean with investment ?
    deal size is the balance u have on ur broker ?

    • easyMarkets
      easyMarkets  Year ago

      Hello Spiridon, Thank you for reaching out to us. You can choose the size of the deal or position that is opened. A standard lot is equivalent to $100,000 of base currency. A mini-lot which is one-tenth of a standard lot, is worth $10,000 of base currency. Five standard lots is worth $500,000 of base currency. Investment is the amount that you invest from your free balance to open the position you desire. For more information please visit our Learn Centre on our website www.easymarkets.com/int/learn-centre/ . Have a nice day!

  • Barry Heaps
    Barry Heaps Year ago +1

    Why do all these leverage tutorials ignore the fact that a loan has been taken out to purchase the property (£80,000 in this case) which, presumably has to be repaid? It does that not matter?

    • Oscar Martinez
      Oscar Martinez Year ago

      he does pay it back.. that's why the profit is 50k and not 130k

  • Kenn Tollens
    Kenn Tollens 4 years ago +1

    If I get 100:1 on $100 and the trade goes down 1% and I sell, then I lose my entire $100. What if it went down 2%, then I owe the broker $200 when I only have $100?

    • M
      M 3 years ago

      The trade should automatically close when you hit stoploss thresshold or you lose 100%

  • Susan Wellington
    Susan Wellington 3 years ago +1

    Every trader looks forward to make profit but mind you in the bid of making these profits, losses could also be accumulated if not careful

    • Felicia Densel
      Felicia Densel 3 years ago

      How do you think I can improve my trading portfolio?I'm having a hard time doing that with my job

    • Nicholas Woods
      Nicholas Woods 3 years ago

      Actually every successful trader today has his/her own bad story to tell before they achieved success. no trader/investor wakeup being successful they all sacrificed something which is time and practice to get the peak of it

    • Aidan Rufus
      Aidan Rufus 3 years ago

      You are absolutely right Susan...

  • Gabriel Sunday Abraham

    Thanks

  • RoBi NISM
    RoBi NISM Year ago

    But i smell there is some problem here, how can we tell that $50000 is profit, bcoz due to bank loan we must pay interest

  • robortalien
    robortalien 4 years ago +1

    What if it is gone down ? Never mentioned that🤣

    • Drew Berry
      Drew Berry 3 years ago +1

      If it's 10 to 1 leverage. For £100 investment. Your position is worthless at £90. The option is gone even if it goes up.

    • Bernapas
      Bernapas 3 years ago

      If there were no risk everyone would be rich

  • Billy Bones
    Billy Bones 2 years ago

    Leverage works both ways
    - 2008 to Ivy League Losers on Wall St

  • Anton Rukhlin
    Anton Rukhlin 3 years ago +2

    it's 1 to 4, not 1 to 5. because it's 20%

    • Nico Herrera
      Nico Herrera 3 years ago

      Anton Rukhlin in other words you put 1/4 of what you asked for
      The ratio is between debt and equity, not between the total value of the asset and your equity, the guy who made the video is a moron

    • Nico Herrera
      Nico Herrera 3 years ago

      Radix no, it’s 4 to 1 because your debt is 80,000 and your equity 20,000, 80,000/20,000= 4
      Not 5🤦🏼‍♂️
      Basic basic math

    • Anton Rukhlin
      Anton Rukhlin 3 years ago

      @Radix not it's not. "1 to 5" is "1/6" and is 16.67%. sounds like the author does not know the difference between "1:5" and "1/5".

    • Radix
      Radix 3 years ago

      Video is correct. 1/4 is 25% not 20%.

  • Jim Clarkson
    Jim Clarkson 3 years ago +4

    Trading forex has made me a fortune since 3 months ago i started.

    • Paweł
      Paweł 3 years ago

      @Jim Clarkson who is your expert trader and how am I able to contact him?

    • Paweł
      Paweł 3 years ago

      Trading 0n a good note as a beginner is difficult, didn't You have losses as a beginner?

  • syed abbas
    syed abbas 9 years ago

    (y)

  • MyFindlay
    MyFindlay 6 years ago

    Hey question, someone set me straight- in the example: they invested 1k leveraged at 1:100 to control 100,000 units (1 lot)
    wouldn't that mean each PIP is worth $10. and a 10 PIP appreciation would equal $1000.... am I missing something????

  • Showery
    Showery 2 years ago +1

    So if you invest 100 into a 10000 deal size, and it dosen't go well, do you lose 100 or even more than your investment? Do you go into debt??

  • Samuel Strachan
    Samuel Strachan 2 years ago +1

    I've never seen someone tell beginners to use leverage...

    • Christopher
      Christopher Year ago

      I just did the other way, not leverage. Forex trading is profitable

    • Christopher
      Christopher Year ago

      You should learn the basics first

    • Christopher
      Christopher Year ago

      Especially for newbies

    • Christopher
      Christopher Year ago +1

      It's not appropriate

  • aisimplified
    aisimplified 3 years ago +1

    1:36 &lose 5time more too,am i right??

  • PrimRose
    PrimRose 2 years ago +1

    Do you guys make this 480P on purpose? Cause all ET is weak quality videos

  • Nicholas Zuazo
    Nicholas Zuazo Year ago

    Can you sugget some book. Please

    • easyMarkets
      easyMarkets  Year ago

      Hello Nicholas Zuazo, Thank you for reaching out to us. We have a wonderful Learn Centre on our website with very informative articles, eBooks and videos. You can access our Learn Centre through our website by clicking on the following link: www.easymarkets.com/eu/learn-centre/ . Should you have further questions, our Customer Service Specialists are available 24 hours a day, from Monday to Friday - just visit our Live Chat through our website www.easymarkets.com/eu/. Have a nice day!

  • Zemonizer
    Zemonizer Year ago

    that dark dot made me to wipe the screen multiple times

  • Ewan Du Plessis
    Ewan Du Plessis Year ago

    Still dont understand

  • James Michaels
    James Michaels 3 years ago +1

    Were dafaq can i buy a studio for $20,000???

    • tim tim
      tim tim 3 years ago

      Means small home

  • CinemaArt
    CinemaArt 7 years ago

    Masak sih.. beneran

  • Silver Simon
    Silver Simon Year ago

    @32 seconds , to explain here's margot Robbie in a bath tub.

  • nbayoungboy
    nbayoungboy Year ago +1

    Yall copied xbox intro lol