Forex | Forex Basics | 7. Margin and Leverage (18/11/2008 17:26:26)

7. Margin and Leverage

Understanding risk in the forex When you buy a currency, it's different than buying a stock. When you buy shares of a stock, the maximum amount you can lose is the face value of your investment. You buy 100 shares of a stock at $10 per share, and your maximum loss is capped at $1,000. When you buy a currency contract, you are speculating on the value of one currency compared to another. The risk is therefore unlimited, as theoretically, the value of a currency can fall against another


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