I was teaching one my friend who was new to Forex trading last weekend and it was kind of difficult to explain to him because English wasn't his first language.
Even if I was to use English, it would still be difficult to explain it in detail.
Luckily, I found this article from Investopedia which does the job excellently.
“Leverage” in general terms simply means borrowed funds. Leverage is widely used not just to acquire physical assets like real estate or automobiles, but also to trade financial assets such as equities and foreign exchange (“forex”).
Forex trading by retail investors has grown by leaps and bounds in recent years, thanks to the proliferation of online trading platforms and the availability of cheap credit. The use of leverage in trading is often likened to a double-edged sword, since it magnifies gains and losses. This is more so in the case of forex trading, where high degrees of leverage are the norm. The examples in the next section illustrate how leverage magnifies returns for both profitable and unprofitable trades.
Read the whole article here: Investopedia
Yours sincerely,
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