What is 1:400 Indices Trading Leverage for $100 Mean?
Indices Trading Leverage in indices trading is the ratio of a indices trader's money to that of the borrowed capital that has been borrowed from the stock indexes trading broker.
for example 1:400 indices trading leverage means that for every 1 dollar a indices trader has in their indices trading account they have borrowed 400 from their stock indexes trading broker. Therefore if a indices trader has $100 in their indices trading account they will have borrowed using 1:400 stock indexes trading leverage and therefore after stock indices leverage of 1:400 they will have $100*1:400 stock indexes trading leverage and this will be equal to $40000 dollars indices trading capital.
Indices Trading Leverage is the use of borrowed funds in indices trading so as to trade much larger volumes in order to increase the profit potential of trades.
1:400 indices trading leverage basically means that as a indices trader you get $400 for every $1 in your stock indexes trading account.
1:400 Indices Trading Leverage for $100 Indices Trading Account
In Indices, a small deposit can control a much larger transaction this is called Indices Trading Leverage, which gives the indices traders the ability to make more profits on opened indices trades, and at the same time keep risk capital to a minimum.
A Indices trader will transact on borrowed capital, having $100 dollars one can borrow the rest using a stock indices leverage option such as 1:400 - meaning that one borrows $400 dollars for every 1 dollar they have in their stock indexes trading account, therefore in total they will control a total of $40000 dollars without having to deposit all of it - this is how indices trading leverage works in stock indexes trading.
Indices Trading Leverage is expressed in the form of a ratio, for Example 1:400, means the indices broker with give a indices trader $400 Dollars for every 1 dollar that the indices trader has.
Indices Trading Margin is the amount of money required by your indices broker so as to allow you to continue trading with the indices trading leveraged amount. Indices Trading Margin is the amount you deposit so as to open an account with. If you deposit $100 then that is your indices trading margin.
With indices trading leverage it is possible for retail investors to trade the stock indexes trading market. Indices Trading Leverage of 1:400 means that for every dollar you deposit, the stock indexes broker will give you 400 dollars. This also means that in converse the indices broker requires you to maintain a margin of $1 Dollar for every $400 Dollars that they give you so as to let you continue controlling the borrowed amount of capital that they have given you for trading.
Indices Trading Margin Trading Example:
If you deposit $100, and the indices broker gives you stock indices leverage of 1:400 then it means you now have $100*(1:400) = $40000 Dollars that you can trade with.
Indices Trading Money Management Guidelines for Trading with 1:400 Indices Trading Leverage
When indices trading with 1:400 stock indices leverage you should come up with your indices trading money management rules that you will use to manage your stock indexes trading account capital. This set of indices trading money management rules should be written in your indices trading plan. If you are a beginner indices trader wanting to open a $100 dollar stock indexes trading account and you do not know what indices trading money management rules are, you can use the learn indices trading tutorials below to learn about what is indices trading money management?
How to come up with indices trading money management rules for trading a 1:400 Indices Trading Leverage Trading Account.
About Indices Trading Leverage
The more stock indices leverage you use the greater the profit or loss
The less stock indices leverage you use the lesser the profit or loss
It is therefore better to use less indices trading leverage so as to minimize the risks involved. The higher the stock indices leverage used the higher the risk. This is one of the indices trading leverage rules not to trade with more than 5:1 stock indexes trading leverage.
In indices trading leverage rules: It is always advisable to stay below 10:1 which is still high, most professional money managers use 2:1 in their indices trading account.
To Learn and Know More about Indices Trading Leverage and Margin - Read the Topics Below:
Indices Trading Leverage and Margin Explained