Leverage & Margin Trading

What Is Leverage?

Leverage allows you to control larger positions with less capital. 100:1 leverage means you can control $100,000 with just $1,000. It amplifies both profits AND losses.

Understanding Margin

Margin is the collateral required to open a leveraged position. With 100:1 leverage, you need 1% margin ($1,000 to control $100,000).

Leverage Ratios Explained

Common ratios: 30:1 (EU regulated), 50:1 (US), 100:1-500:1 (offshore). Higher leverage means higher risk. Most professionals use 10:1 or less effective leverage.

Margin Calls

A margin call occurs when your equity falls below the required margin. The broker may close your positions automatically. Always maintain sufficient margin buffer.

Safe Leverage Practices

Use leverage conservatively. Never use maximum available leverage. Calculate position sizes based on dollar risk, not leverage multiples. Keep margin level above 200%.