When you invest money into something, what you are looking for most of the time is to get more than you put in. The bigger the difference between when you get out and what you put in, the better your chances of becoming richer in the long run, as it will help you earn more money through future investments.
While instantly and surely making a profit is too good to be true, getting more purchasing power than what you put in is the next best thing. That is what leverage is when it comes to trading currencies and other markets. Basically it means that you can trade with much more money than you put in.
Say you invest $100 into your forex account, being able to use $10,000 instead of just the amount you put in will give you a great advantage. Of course, leverage varies depending on the instruments you are investing in. You should be looking for the highest leverage possible.
iForex is one such forex broker that prides itself on offering amazing leverage, so you should learn how to make use of the iForex leverage.
Taking advantage of iForex leverage
Just how good is the leverage offered by iForex? Again, it depends on the specific instruments you are trading in. Generally speaking, iForex leverage can be as high as 400:1. That means that your iForex leverage gives you up to $40,000 in purchasing power when you invest a mere $100.
So what does this mean for you? When you have high leverage, you get more to work with. For your limited investment, you can work with a lot more. Let us say that you want to invest in something that you expect will give you a 5% return on your investment. Unfortunately, you only have $100 to invest. Without leverage, you can only expect to earn $105, assuming your investment is as successful as you expected. That means that you went through all that trouble just to earn $5, which is not bad, but it is not that great.
However, with the 400:1 iForex leverage, investing $100 allows you to work with $40,000. This means that with a 5% return on your investment, you can earn as much as $2,000. This gives you much more of a return for your investment. You end up earning more than you put in.
Comparison with other brokers
In general, all forex brokers come with some degree of leverage. This is one of the many ways used to entice traders to choose them over other brokers. However, iForex is known for have competitive leverage that is at par or higher than that offered by its competitors.
XTrade matches iForex with leverage as high as 400:1 on certain instruments. FXCM has a maximum leverage of a mere 200:1. Plus500 has a maximum 100:1 leverage.
Always remember that these are not fixed ratios, and you need to look at the particular instruments offered by each broker. However, knowing that iForex can offer leverage this high on some instruments might be a reason to consider them as a forex broker.