What's Difference Between Maximum Stock Leverage and Used Leverage?

You should note that there's a difference between maximum leverage ( leverage given by your broker which is the highest stock leverage you can trade with if you choose to) & used leverage ( trading leverage depending on lots you have opened/open trades). One is broker's (Maximum) & other is trader's (Used). To explain this particular concept we will use stock trading example above:

If your online broker has given you 100:1 Maximum stock trading leverage, but you only open lots of $100,000 then Used trading leverage is:

100,000 : $10,000 (your money)

10:1 Used Leverage

You have used 10:1 leverage, but your max leverage is still 100:1. This means that even if you're given 100:1 Maximum trading leverage or 200:1 Maximum trading leverage, you do not have to use all of it. It's best to keep your used leverage to a maximum of 10:1 but you will still choose 100:1 maximum leverage ratio for your trading account. The extra trading leverage will give you what we call Free Indices Trading Margin, As long as you have Free margin on your account then your stock trades won't get closed by your broker because this margin requirement will remain above required level.

In trading indices one of your indices rules: equity management guide-lines on your trade plan should be to use leverage below 5:1.

Leverage Example

The examples explained below, the set leverage option is 100:1, margin which is 1 percent is $2683.07, therefore the total amount controlled by trader is: $268,307 - this is because with this leverage the trader has used little of his money and borrowed the rest of the money, with this set at 100:1, trader is using 1% of their capital, this 1 percent equals to $2683.07, if 1% equals to $2683.07 then 100% is $268,307

What's the Difference Between Maximum Indices Leverage and Used Leverage?

In the above image example, the trader is using $2683.07 dollars, total controlled amount is $268,307 dollars, but account equity is 16,116.55, therefore used leverage is ( $268,307 dollars divide by 16,116.55 ) = 16.64 : 1

16.64 : 1

In the account above even though the max trading leverage set stock trade leverage is 100:1, Used leverage is 16.64 : 1