Human is the creature full of emotion. Emotional such as greed drive people come in to Forex and seek for high return. Most of the traders like to use leverage when they "think" the market is favor for them. My personal experience, if you 'think' the market is always with your site, you are looking for trouble. But 'Thinking' right with Mr. Market may resulting a huge profit if it comes with other concrete variables.
How does leverage work? Simple. If you have USD10,000 and open a forex account with ABC Bank which offer 100:1, it will give you 100xUSD10,000=USD1,000,000 to trade. Let say, you 'think' EUR/USD will move from 1.4000 t0 1.3500 since everyone like USD. Woola..you are right, after 2 weeks, you achieve your target. You will earn 0.0500(1.4000-1.3500)XUSD1,000,000=USD50,000. With capital USD10,000 you earn 5X in 2 weeks. Amazing return! Those treat Forex market as Casino like this style a lot.
Now, if suddenly some big players sell billions of USD against EUR. Ohh.....let see what happen. Since you are very confidence USD will appreciate and not willing to put stop loss or hedge it to avoid market pull back. Once the market move against you only 0.0100 (1.4100-1.4000), you account is totally wipe out!!!
I strongly suggest those who 'think' they are always right don't invest in Forex. Mr. Market is always right, not you!
