Because the Forex market is so liquid, it is also highly leveraged. This means that brokers and banks are prepared to lend up to 100 times the amount of cash funds you have on deposit to trade with. However, as the leverage increases, so does the risk associated with any trade.
The reason for the increase in risk is due to the fact of being leveraged means using the banks’ or brokers’ money and the margin for error becomes much smaller.
