Margin and leverage are among the most important concepts to understand when trading forex. These essential tools allow forex traders to control trading positions that are substantially greater in size than would be the case without the use of these tools. It is important for inexperienced traders and who are new to trading, on any financial markets, to completely understand the concepts of leverage and margin.

Forex trading does offer high leverage in the sense that for an initial margin requirement, a trader can build up and control a huge amount of money. Leveraging, which is also known as trading on margin, means you can make a profit if markets move in your favor, though you can also lose more than your initial deposit should markets move against you. This is because any profits and losses are based on the full value of the trade, and not just the deposit amount.

Financial leverage attracts a lot of traders to the forex market. Financial leverage allows traders to place orders that are significantly higher than their actual deposit - it can be viewed as credit provided by a broker. This tool allows forex traders to trade much more than they actually have and potentially achieve higher profits in the market.

Forex trading by retail investors has grown in recent years, thanks to online trading platforms giving everyone the ability to trade from their houses. One of the reasons so many people are attracted to trading forex compared to other markets is that with forex you can usually get much higher leverage than you would elsewhere.