What does foreign exchange leverage mean?

Refers to high leverage, such as 500 times, 1000 times leverage. Under normal circumstances, the leverage of the foreign exchange market is between 30 and 200, and the leverage below 50 times is suitable for institutions to participate, and the leverage of 100~200 is suitable for individual traders to participate. Due to the characteristics of the foreign exchange market, people generally don't measure the volatility of the market by the percentage of fluctuation, but by the "standard point". For example, the euro against the US dollar, a standard point is the exchange rate fluctuation of 0.000 1, which is one ten thousandth. Under the leverage of 200 times, traders only need to pay $500. Every time the exchange rate fluctuates by a standard point, the trader gains or loses 10 USD. At the end of the day, the fluctuation point of the euro against the dollar is probably between tens and hundreds, so as to obtain considerable income under low fluctuation.

Leverage is a double-edged sword, which can lower the trading threshold and allow more individual traders to participate; At the same time, it also increases the risk of trading, especially when the principal is lost or even owed, which is called short position in the industry. Many people regard short positions as a problem of high leverage. In fact, this has little to do with the level of leverage, but the risk control of traders is not in place. For the sake of investment safety, it is recommended to choose a lever suitable for your own operation level to invest.