Exceptional Leverage

Leverage is essentially the ability to trade a larger position than the money you actually have on your account. For instance, if you have £15,000 on your account put you are using that capital to control a position with a trade value of £150,000 (that is, ten times bigger) you have leverage of 10:1.

Leverage gives you the chance to enhance your profit margin, by maximising the return on your capital. With InterTrader.com you need only put down a small fraction of the full contract value (your initial margin requirement) to open a position, from less than 1%. The difference between this amount and the contract value is your leverage ratio. On the major forex pairs you can gain leverage as high as 300:1.

How leverage maximises returns

Say you want to buy GBP/USD and you have £10,000 on your account. With InterTrader.com you could use that capital to open 30 contracts, each with a notional trade value of £100,000, giving you leverage of 300:1.

The following table compares this trade to the same position without any leverage, supposing that you buy GBP/USD at 1.5462, and later sell at 1.5516, for a profit of 54 pips.

Money on account	£10,000	£10,000
Leverage ratio	300:1	1:1
Notional trade size	£3,000,000	£10,000
Increase in pip value	54 pips	54 pips
Profit	$16,200	$54

Warning: leverage also maximises risk

You should note that, in maximising the return on your capital, leverage also maximises your potential losses. Also, your initial margin requirement does not represent the full amount you might lose on your position should the market move against you.

In the example above, a loss of 20 pips would equal a loss of just $20 without any leverage, but with a 300:1 ratio this would come to $6000. You should always take the risk into account before you open any leveraged forex position.