What does “Leverage” mean?
Leverage is a concept that enables you to multiply your exposure to a financial instrument, without committing the whole amount of capital necessary to own the physical instrument. When trading using Leverage you only need to put down a fraction of the total value of your position. Profits and losses are based on the total size of the position, so the end result of a trade can be much larger than the initial outlay, in terms of profits or losses. CFDs are a form of leverage trading. The amount needed to open and maintain a leveraged trade is called “the margin”. Trading using leverage is sometimes called “margin trading”. In general, when using leverage a small change in the price of the CFD is amplified into a bigger change, resulting in increased returns/losses.
Leverage of “10%” (or 1:10) means that if the price of the underlying asset changes by 1%, it is as if the price of the CFD changed by 10%. For example: a $100 balance leveraged by 1:10 increases to $1000. This allows you to trade up to $1000 worth of instruments. Information about the predefined leverage set per instrument can be found by clicking on the "Details" link next to the instrument's name in the platform's main screen.
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