In trading, leverage refers to the ability to control a large position in the market with a relatively smaller amount of capital. It involves borrowing funds to increase the size of a trading position beyond what would be possible with one’s own capital alone.
Leverage is expressed as a ratio, such as 50:1, 100:1, or even higher, indicating the proportion of borrowed funds to the trader’s own capital. For example, with 100:1 leverage, a trader can control a position worth $100,000 with just $1,000 of their own capital.
While leverage can amplify potential profits, it also magnifies the risks, as losses are also calculated based on the total position size. Traders should use leverage cautiously and be aware of the increased risk of significant losses. It’s a double-edged sword that can enhance both gains and losses in trading.
Leverage in Excent Capital
Optimize your trading strategy by utilizing leverage options available exclusively on our platform. Leverage stands as a great tool in the financial markets, affording our clients the ability to engage in trades without the immediate commitment of the entire capital.
At our platform, we provide different leverage options:
- 1:100 for major and minor FX pairs, indices, and commodities
- 1:10 for stocks
- 1:5 for cryptocurrencies.
This diverse leverage range empowers you to magnify your trading capacity, allowing control over more substantial positions with only a fraction of the capital investment.
Whats is margin
In trading, margin refers to the amount of money or collateral that a trader needs to deposit with a broker in order to open and maintain a trading position. It is essentially a deposit that ensures the trader has the financial capability to cover potential losses. Trading on margin allows traders to control a larger position size with a smaller amount of capital.
The margin requirement is typically expressed as a percentage, representing the ratio of the required margin to the total value of the position. For example, a margin requirement of 2% for a $100,000 position means that the trader needs to deposit $2,000 to open and maintain that position. While trading on margin amplifies potential returns, it also increases the risk of significant losses, as losses are calculated based on the total value of the position, not just the margin amount.
Whats is margin
In trading, margin refers to the amount of money or collateral that a trader needs to deposit with a broker in order to open and maintain a trading position. It is essentially a deposit that ensures the trader has the financial capability to cover potential losses. Trading on margin allows traders to control a larger position size with a smaller amount of capital.
The margin requirement is typically expressed as a percentage, representing the ratio of the required margin to the total value of the position. For example, a margin requirement of 2% for a $100,000 position means that the trader needs to deposit $2,000 to open and maintain that position. While trading on margin amplifies potential returns, it also increases the risk of significant losses, as losses are calculated based on the total value of the position, not just the margin amount.
Margin Call
A margin call occurs in trading when the value of a trader’s margin account falls below a certain level, known as the maintenance margin. The maintenance margin is a minimum amount of equity that must be maintained to keep a trading position open. When the margin level drops below this threshold due to losses in the trader’s positions, the broker issues a margin call, prompting the trader to deposit additional funds into the account to bring the margin level back above the maintenance margin.