leverage is the borrowing of capital to maximise profit. ... forex trading is completed in contracts called “lots”. ... a standard lot is 100,000 units of currency, which means that, using US dollars for denomination, each pip movement is worth $10. ... in order to use leverage, a forex broker requires a minimum amount of capital from the trader – this is called margin. ... different brokers offer different amount of leverage, the most common is 100:1. This means that a trader can open a standard lot with just $1,000. ... when traders use leverage without employing money management, they are in danger of losing their entire trading account.