Made Easy Forex

Q:  let’s say you put up 2500 dollars in a forex broker who offers 400 leverage, the investor would then become a million dollar player, right? 2500 x 400 = 1,000,000. The investor can then trade the market with a million dollars in this case right?

A:  The main attraction of the forex market is the leverage. That means with a leverage of 1:100, which is the most common leverage, offered today in Forex, you can trade a $100,000 contract of EURO against US dollar with only $1,000 deposit.
The nice thing about it is that a change of 0.5% to the exchange rate would increase (or decrease depending on what was bought or sold…) by 50%!! Such movement happens every day, in a few hours, even minutes.

I don’t believe that you can get this kind of leverage. In precious metals you can typically get 25:1 maximum. Bonds(interest rates)– around 40:1 . I would avoid excessive leverage anywhere. More leverage= more risk, and more chance that you may get whipsawed out of your position even if you are right about your bet.