Trade on Forex is standardized and conducted by the fixed quantities of currency (lots). In the American system the currency is sailed and bought by the quantities of a foreign currency fixed in relation to US dollar. We will adhere to the European system.
In the European system it is accepted to trade with lots on 100 thousand (in certain cases 150 thousand) the units of currency, standing in pair the first. For example, operating with a euro/dollar course, we can buy or sell 100 thousand euro (1 lot) or any multiple to 100 thousand quantity of euro, selling or buying (exchanging) thus equivalent quantity of dollars. So it is possible to trade in volumes in 200 thousand euro (2 lots), 300 thousand euro (3 lots) etc. The big figures in this case are deceptive: actually for trade for fulfillment of the transaction it is enough to investor to have 1/100 part from the prize sum, i.e. 1000 euros for trade in 1 lot, 2000 euros for trade in 2 lots etc.
Trade with granting of special conditions when the transaction consists in volume 0,1 of lot, 0,2 of lot, 0,3 of lot etc. It is clear that it is possible in certain cases also that for fulfillment of the transaction about 0,1 of lot it is required to the investor in 10 times less than own means, than for the transaction conclusion on 1 lot – namely, from the investor maintenance of the pledge equal only of 100 euros is required.
Now I will tell you about leverage.
Usually for fulfillment of the transaction the client preliminary places certain quantity of the means on the account with the principal (bank or the company giving access on the market). Real trade is thus conducted on money of the principal, which gives for an exit on the market a leverage (in a standard case it is equally 1:100). Thanks to it, the client (investor) has possibility to operate the sum many times over exceeding his own that raises profitableness in percentage terms. Thus means of the client serve so-called margin (some kind of pledge), which principal freezes on the account for all period of maintenance of the transaction while the client (investor) will not make return exchange operation.
It is interesting and a little unusual that use of leverage at such scheme, contrary to widespread opinion, does not raise (but also, of course, does not reduce) risks of the investor in absolute expression. All risk or the income under the transaction is defined by the fixed size of a lot (which cannot be changed) and quantity of lots in the transaction. The leverage gives the chance to invest the smaller sum, i.e. liberates a spare cash of the client. I will notice that without use of leverage an exit on the market for the investor with the sum less than 100 thousand units of currency would be simply impossible.
Before you make up your mind to make a forex investment or start forex trading yourself, better find a good forex book and read more about the currency exchange market - this will save you from tons of troubles and traps.
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