When trading, forex leverage allows traders to control a larger exposure with less of their own funds. The difference between the total trade value and the trader’s margin requirement is usually ‘borrowed’ from the forex broker. Traders can usually get more leverage on forex than other financial instruments, meaning they can control a larger sum of money with a smaller deposit.
The availability of leverage is one of the reasons that many people are interested in trading FX via a forex spread betting or CFD trading account. CMC Markets’ accounts offer competitive margin rates on forex instruments starting at just 3.3%, or 30:1 leverage. This is higher leverage than the 20% margin rate (5:1 leverage) available for shares instruments.