How does leverage trading for beginners work?
Trading using leverage is trading on credit by depositing a small amount of cash and then borrowing a more substantial amount of cash. For example, a trade on the EUR futures market has a contract value of $125,000, but by using leverage, the same trade can be made with approximately $6,000 in cash.
When is leverage good?
If leverage increases productivity, then it is “good” leverage. Credit is good when it efficiently allocates resources and produces income so that debt can be paid back. Income needs to grow faster than debt, but productivity needs to rise faster than income, so raising productivity is paramount.
Where can I trade leverage?
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