What is The Difference Between Maximum Indices Trading Leverage and Used Indices Trading Leverage?
You should note that there is a difference between maximum indices trading leverage ( indices trading leverage given by your broker which is the highest indices trading leverage you can trade with if you choose to) and used indices trading leverage ( indices trading leverage depending on the lots you have opened/open positions). One is the broker's (Maximum) and the other is trader's (Used). To explain this concept we shall use the indices trading example above:
If your indices trading broker has given you 100:1 Maximum indices trading leverage, but you only open 1 lot of 100,000 dollars then Used indices trading leverage is:
100,000 dollars (1 lot ): 10,000 dollars (your money)
10:1 Used Indices Trading Leverage
You have used 10:1 indices trading leverage, but your maximum indices trading leverage is still 100:1. This means that even if you are given 100:1 Maximum indices trading leverage or 200:1 Maximum indices trading leverage , you do not have to use all of it. It is best to keep your used indices trading leverage to a maximum of 10:1 but you will still select 100:1 maximum leverage option for your indices trading account. The extra indices trading leverage will give you what we call Free Stock Indices Trading Margin, As long as you have some Free margin on your trading account then your indices trading trades will not get closed by your indices trading broker because this margin requirement will remain above the required level.
When it comes to trading indices one of your indices trading rules: indices trading money management rules on your indices trading plan should be to use below 5:1.
Indices Trading Leverage Example
The example illustrated and explained below, the set indices trading leverage is 100:1, the margin which is 1% is $2683.07, therefore the total amount controlled by the indices trader is: $268,307 - this is because with this indices trading leverage the indices trader has used little of his money and borrowed the rest, with this set at 100:1, the indices trader is using 1 % of their capital, this 1% is $2683.07, if 1% is $2683.07 then 100% is $268,307
MT4 Indices Trading Platform - What is The Difference Between Maximum Indices Trading Leverage and Used Indices Trading Leverage?
In the above image example, the indices trader is using $2683.07, the total controlled amount is $268,307, but account equity is 16,116.55, therefore used indices trading leverage is ($268,307 divide by 16,116.55) = 16.64 : 1
16.64 : 1
In the Indices trading account above even though the maximum indices trading leverage set indices trading leverage is 100:1, Used indices trading leverage is 16.64 : 1