Opening a leveraged position by buying foreign currency
The term Forex describes the foreign exchange market; The product that the individual user encounters is often a leveraged contract. Opening this contract is not the same risk as buying and holding foreign currency from the bank. In a leveraged transaction, a small price change may cause a large loss compared to the collateral. If you cannot understand the structure of the product you are trading, counterparty, position size and closing conditions, stop before depositing money. This section is for education; It is not recommended to buy or sell a particular currency.
Why is knowing the price direction not enough?
Even if an opinion turns out to be correct, the price may first move in the opposite direction. Your position may be closed earlier due to lack of collateral. Spread, commission and carrying cost also affect the result. So a general notion like 'The dollar will eventually rise' does not justify a certain size of leveraged transaction. Timing and position size are separate decisions from price expectation. Experimenting with borrowed money or daily living expenses will aggravate the impact of the loss.
