Leverage!

In finance, leverage (sometimes referred to as gearing in the United Kingdom and Australia) are strategies involving the use of funds borrowed by purchasing assets, and after taxes the assets and borrowing costs are assets. Typically, funders limit the amount of risk you want to execute, limit the amount of leverage that is permitted, and require assets to be secured as collateral for the loan. For example, in the case of residential real estate, financial institutions can provide 80% of the market value of real estate. You can borrow 70% for commercial real estate and 60% for some acts for stocks. Leverage will double revenue and loss. On the other hand, there is a risk that stocks will lead to losses. It seems that the financial cost exceeds the revenue from the asset or the value of the asset is declining.

Source!

Lifting can occur in many situations such as:

• Individuals use savings when they purchase a house by financing a part of the purchase price of the mortgage.

• Individuals lend brokerage fees and provide exposure to financial investment.

• Securities such as options and futures are transfers between borrowed parties whose principal was explicitly borrowed at a very low interest rate from the T account [2]

• The business owner lends a part of necessary financing to the company and uses the investment. The more people will lend, the less necessary justice, the less profitable and the loss, the more expanding in proportion to the higher foundation. 

• Enterprises shift activities with a fixed input cost when revenue needs to fluctuate. An increase in revenue results in a significant increase in revenues.

• Leveraged funds may tax assets by procuring a portion of the portfolio with short-term cash flows from other positions.

• EBIT means profit before interest and tax.

• DOL is the level of functional consumption

• LDF is the level of finance activity

• DCL is the level of interoperability

• RO returns to court

• ROA is an asset

Risk!

If the return on the asset exceeds the loan amount, the income increases, so stocks may increase losses. Companies that lend too much money may bankrupt or collapse with business ventures, but small businesses can survive. Investors who buy shares at a margin of 50% suffer a loss of 40% when stocks decline by 20%.

This risk may be due to the loss of the amount of guaranteed assets. The broker needs to add funds when the amount of securities declines. If the real estate amount is the subject of the loan, the bank can not change the mortgage. Cash flow and income are sufficient to maintain ongoing borrowing costs, but loans may be necessary.

This can occur exactly if there is a small liquid market and the price of other people 's sale is a depressed price. This means that if the bad things go wrong, the increase will increase, the loss will increase while things are over. This can quickly worsen even if the decline in asset returns is low or temporary.  Risk can be mitigated by organizing the rules of behavior, storing unused coins for additional loans, and lifting only liquid liquids.

On the other hand, extreme level behavior of Forex trading is relatively low risk per unit because of the relative stability compared to other markets. Compared to other trading markets, foreign exchange traders need to exchange more units of units to obtain real benefits. For example, many brokers can use 100: 1 investors. In other words, people who manage $ 1,000 can manage $ 100,000