what is leaverage (in context of share mkt & forex)?

Leverage is using borrowed money to purchase a larger amount of an investment for the same amount of cash. Using leverage is common in real estate investing, but stock market investors can also use leverage to boost their returns. Leverage is not always bad, however; it can increase the shareholders' return on investment and often there are tax advantages associated with borrowing. it is also called financial leverage.

A simple example of financial leverage: Say you have $10 that you want to invest in a stock. If you invest that $10 and it goes up 10%, you’ve made $1. However, if you’re able to borrow an additional $90 to purchase that stock, you’d have $100 total to invest. If that stock goes up 10%, you’ve made $10. This is leverage: borrowing money to magnify returns. (Of course, losses are magnified as well.)

Hope I helped :)

There you go, easy cake:

In finance leverage is a very common term for any technique to multiply gains and losses. In Forex the use of a leverage means borrowing money from a broker in order to increase the transaction volume.

Without the leverage the spot forex transactions would not be profitable as the profits/losses rely on movements of a few pips. The leverage also makes possible a range of financial services as the investor or trader is supposed to pay fees on every leveraged transaction.

The use of leverage in the retail forex industry is in the US strictly regulated by the CFTC and limited to 1:50. This is to say with an investment of $ 100 it is possible to borrow $ 5000, whereas some european brokers might offer a leverage of 1:200.

This makes the forex market much more volatile and any forex transaction more susceptible to smaller fluctuations, thus being very attractive to short term speculative investments.

Leverage is using borrowed money to purchase a larger amount of an investment for the same amount of cash.

A better explanation (and example) is given here:

http://www.investopedia.com/terms/l/leverage.asp#a...