How is Leverage Calculated?

leverage is calculated based on a ratio. The ratio can be 100:1 or 50:1 or 10:1.

For 100:1 leverage ratio it means 1:100 leverage option means one can borrow $100 dollars from their broker for every $1 dollar in their stock trading account, therefore one with a deposit of $1,000 can borrow up to $100,000 from their broker - ($1,000*1:100 which is equivalent to $100,000). One can then use this borrowed capital to open stock trades with.

For 50:1 leverage ratio it means 1:50 leverage option means one can borrow $50 dollars from their broker for every $1 dollar in their stock trading account, therefore a trader with a deposit of $1,000 can borrow up to $50,000 from their broker - ($1,000*1:50 which is equal to $50,000). One can then use this borrowed capital to open stock trades with.

For 10:1 leverage ratio it means 1:10 leverage option means one can borrow $10 dollars from their broker for every $1 dollar in their stock trading account, therefore a trader with a deposit of $1,000 can borrow up to $10,000 from their broker - ($1,000*1:10 which is equal to $10,000). One can then use this borrowed capital to open stock trades with.

To Learn and Know More about Leverage & Margin - How to Read the Topics Below:

• What is Leverage

• Indices Leverage & Indices Margin Example

• Indices Leverage Margin Guide

• What is Money Management

• Indices Money Management Guidelines

Indices Leverage & Margin Explained