The size of the lever has a deep relationship with the explosion of the position. The greater the lever, the less likely it is to explode. However, investors should be reminded that when choosing a foreign exchange platform, the trading leverage should not exceed 400 times, because platforms with leverage above 400 times are not subject to formal supervision. At present, the maximum leverage allowed by NFA of American Futures Association is 50 times, FSA of British Financial Supervisory Authority is 200 times and Australian Supervisory Authority is 400 times.

Give a simple example to illustrate the relationship between leverage and short position in foreign exchange margin trading.

To do 1 hand EUR/USD, you need a deposit of 1400 USD with leverage of 100 times. If the customer's total capital is $2,000 and the remaining available deposit in the account is $600, that is, if the reverse fluctuation exceeds 60 points, the position will explode.

To make 1 EUR/USD, you need a deposit of 700 USD with 200 times leverage. If the customer's total capital is $2,000 and the remaining available deposit in the account is 1300, that is to say, the position will be broken if the reverse fluctuation exceeds 130.