Forex trading does offer high leverage in the sense that for an initial margin requirement, a trader can build up and control a huge amount of money, and high leverage means high risk. Leverage is a “double edged sword”. When you are right on your trade this leverage multiplies your gains. When you are wrong, however, same leverage exacerbates your losses. A common mistake newbie traders make is to use inadequate leverage with no regard to the size of their account balance, which could be devastating. Without concern over the downside risk, high leverage can quickly wipe trader’s funds.