Option Leverage – Trading without Margin
In Forex trading, a small deposit can control a much larger total contract value. Leverage gives the trader the ability to make nice profits while at the same time keeping the risk capital to a minimum.Option risk is limited to the premium paid for the option plus fees.
For example, if you trade with 1:100 leverage it means that a 100 EUR margin deposit would enable a trader to buy or sell 10,000 EUR worth of currencies. However, leverage can also be a double-edged sword as without proper risk management, this high degree of leverage can lead to large losses as well as gains. IT is the trader’s sole responsibility if a trade makes or loses money.