One of the secrets Forex - The Risk Level
Forex would just be another market, with a 3-10% return on investment every year, if it did not have that special trick: You leverage your money with broker’s ones and the cash you invest is simply a guarantee.
What does this mean? Let’s say you have $1000. You can choose to play with a risk level of 1, and thus playing with $1000, which is really boring. This means that if you buy Euros over USD, and Euros gain 5%, you will do $50.
Now you can increase you risk level, up to 1000! This means that with a risk level of 100 per example, if you have $1000, you invest in reality $100,000. The broker will buy for you 100,000$ worth of Euros. If you win, no problem, your investment is kept. If you loose, as soon as you have lost $1000 over your $100,000 investment, so 1%, the broker will sell the whole $100,000, to make sure he does not loose anything.
This can be risky of course. But if well done, can be EXTREMELY profitable. You capitalize over other’s people money!
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