Forex leverage also mitigates the negative effects of low volatility. Since markets move in longer cycles than more stable items, volatile transactions may offer the highest returns. Since currency dealers are cautious and there are few components that can publicly predict currency price swings, volatility in the forex markets is typically on the low end. The benefit of leverage is that it allows for bigger returns on smaller transaction volumes, thus relieving the oppressive effects of low volatility. Leverage allows traders to benefit from reduced market volatility by making even small adjustments to highly leveraged positions. Leverage is the original two-edged sword. When something works for you, it works flawlessly. However, if it turns against you, it has the potential to do enormous harm in the blink of an eye. As a consequence, let's look at the downsides as we begin to scratch the surface of the forms of damage that leverage may cause.