What is leverage?

Beginner Questions
1

Hi Guys and Girls! I’m a total beginner in the world of forex and currently in the process of teaching myself how to trade. :blush: I’m just wondering if anyone would be kind enough to help me understand a few things? Can someone explain to me…

  1. What is leverage? My broker has given me a 50:1 leverage. What does this mean?

  2. What does Raw Spread mean?

  3. What are Hedge Funds? I understand they are professional investors? But what kind?

In regards to Support & Resistance, what does break and retest mean?

What is the purpose of Twin Trading?

Any help and advice would be much appreciated to help me understand what these basic terms mean. :blush:

Hope you’re all having a great Saturday! :blush:

2

Ok, I would like to first know, is it a live account or a demo?
Currently are you taking any trading course?

3

Hi. Yes it is a live account. I am with a company that offers education. I am taking signals and making money, I am learning slowly, it’s just I want to expand my knowledge on the questions asked :blush:

4

Here’s my opinion. You may not like it but I stick by it. You are taking signals and dont understand the basics. Therefore either you will get scammed or you’ll blow your account. Next ask your broker or company as they are offering you the leverage so ask them what it means. If you are embarrassed to ask them questions then do the babypips course and study- all the answers are in there. Or if you cant be bothered then search what you want on this site under search. Likelihood is they’ve been answered before. Good luck.

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5

Leverage: is having the ability to control a large amount of money using none or very little of your own money and borrowing the rest. In otherwards is how many times you lever your whole account. forexample, to control a $100k position, your broker will set aside $1k from your account. Your leverage which is expressed in ratios is now 100:1. Well according to your leverage of 50:1, it means your broker requires a 2% margin(good faith deposit) to open a position. But this know the higher the leverage the lesser the margin.
Break: is when support and resistance levels give away. prices pass convincingly through a support and resistance zone.
Retest: sort of confirmation that the support and resistance levels will hold.

6

Thanks so much for taking the time to help me in my learning Bryan, your help and time is greatly appreciated :blush:

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7

Thanks for your response. :blush:

8

@Rickster99 is right. Learn to trade for yourself first on a demo account and subsequently on a live micro account. Get some knowledge on trading forex and then decide if you want to purchase signals and risk your money. There is no dearth of scam artists in this industry so if you don’t know what you are doing then you can easily fall victim to these nefarious individuals and companies. They will make you believe that trading is simple and that you can make a lot of money in a very short time even as a novice. Both of the above are false. Tread lightly.

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9

You can find answers on your questions in baby pips school they described trading basics very thoroughly. Even with my experience I could find and fill gaps in my knowledge!

10

Hi, thanks so much for your help. It’s much appreciated :blush:

11

Thanks so much for your advice, it’s much appreciated :blush:

12

leverage contains huge risk than all others financial tool in Forex , so before using it its more appropriate to ensure real money management. otherwise it can be dangerous when using.

13

Thank you so much :blush:

14

Not a great idea to be live trading when you still have those basic questions. Listen to @Rickster99 and @QuadPip

16

Leverage is the use of borrowed funds to increase one’s trading position beyond what would be available from their cash balance alone. Forex traders often use leverage to profit from relatively small price changes in currency pairs. Leverage, however, can amplify both profits as well as losses.