Brokers provide retail traders with leverage to trade the forex market.
Without leverage, a trader would need to pay out USD100,000 to trade one
standard lot of currencies. With a 100:1 leverage, a trader would need to put
up only 1/100th of the entire amount, or USD1,000. This amount is called
margin. Margin basically allows a trader to purchase a contract without the
need to provide the full value of the contract.