The power of leverage – how much do I need to trade it?

Finally, we are about to answer the main question of any investor: how much do I have to have in my trading account and how much can I expect from it?

Before we continue, let me draw your attention to the following important fact about FX trading.

Note

Do not confuse the return on investment as a performance metric with the actual return on actual investment!

To understand it, we should again recall the essence of margin trading and how it differs from regular investment and trading without margins.

When you invest or trade without margin, you can buy only that amount of assets (equities, commodities, whatever) that cost the amount of money in your account. For example, if you trade stocks, and a stock’s price is $100, and you have $10,000 in your account, then you can buy no more than 100 shares of the stock (actually a bit less because of trading costs).

However, if you trade on margin, then you...