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What is Leverage, and how does it work?
In your trading activities, you can use leverage, a feature that increases your trade's profit potential, as well as your risk.
Leverage is one of Libertex's major tools. It allows you to increase your trade's profit potential.
How does it work? It's very simple. Let's assume you invest $50 in EUR/USD, and your leverage is one. If the price goes up 10%, your profit will be $5 ($50 x 10%). However, if you set the leverage to 20 instead of 1, your investment amount will rise to $1,000 ($50x20).
As you can see, your profit has been multiplied by 20. That's how leverage works. It's a little like the speed of a car: the greater it is, the faster you reach your destination. However, high speed brings more risk. That's why every car driver chooses the speed that works for them, depending on their experience, road surface conditions and the traffic code. For novice traders, we recommend using the minimum leverage of 1 to avoid major risk in case the market moves against you.