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| Credits to Babypips |
As a trader, it is crucial that you understand both the benefits AND the pitfalls of trading with leverage.
Using a ratio of 100:1 as an example, means that it is possible to enter into a trade for up to $100 for every $1 in your account.
With as little as $1,000 of margin available in your account, you can trade up to $100,000 at 100:1 leverage.
This gives you the potential to earn profits on the equivalent of a $100,000 trade!
It’s like a super scrawny dude who has a super long forearm entering an arm wrestling match.
If he knows what he’s doing, it doesn’t matter if his opponent is Arnold Schwarzenegger, due to the leverage that his forearm can generate, he’ll usually come out on top.
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