leverage

As usual for a transaction the client first allocates a certain amount of their funds in the account at the principal (the bank or company that provides market access). The real trade is conducted with the money of the principal, who provides for entering the market leverage (in the standard case is equal to the leverage of 1:100). Thanks to this client (the investor) is able to handle the amount many times greater than his own, which increases the yield in percentage terms. In this case the customer's funds are so-called margin (a kind of collateral), which freezes the principal on his account for the duration of the maintenance of the transaction until the client (investor) does not make a reverse exchange.
The use of leverage in this scheme, contrary to popular belief, does not increase (but not reduce) the risks of the investor in absolute terms. This is understandable: the amount of leverage is not included in the formula that carried out the calculations of the results of the transaction, as we shall see below. After all, risk or revenue on the transaction is determined by a fixed section of the lot (which can not be changed) and the number of lots in the transaction. Leverage allows you to invest a smaller amount, ie, releases free client money. Note that without the leverage to enter the market for an investor with a sum of not less than 100 thousand units of currency would be simply impossible.