Which is the Best Leverage to Use in Indices Trading for Beginner Traders?
Leverage in Indices Trading
The best trading leverage to use is 100:1 trading leverage. This is the leverage option in stock indices trading that's also used by experienced stocks traders.
For $100 Dollars Account
With 1:100 trading leverage when you open a trading account with $100 you'll have capital of $10,000 to open stock trade transactions with - with 1:100 leverage it means your broker gives you $100 for every dollar which you have in your trading account. Hence, if you have $100 - 100*1:100 Leverage is equivalent to 10,000 that you can trade with.
In Trading with $100 you can control $10,000 capital to trade with after leverage ratio of 1:100
For $200 Account
With 1:100 trading leverage when you open a account with $200 you will have capital of $20,000 to open stock trade transactions with - with 1:100 leverage it means your broker gives you $100 for every dollar which you have in your trading account. Hence, if you have $200 - 200*1:100 Leverage is equal to 20,000 that you can trade with.
In Trading with $200 dollars you can control $20,000 capital to trade with after leverage ratio of 1:100
For $500 Account
With 1:100 trading leverage when you open a trading account with $500 you'll have capital of $50,000 to open stock trade transactions with - with 1:100 leverage it means your broker gives you $100 for every dollar which you have in your trading account. Hence, if you have 500 - 500*1:100 Leverage is equal to 50,000 that you can trade with.
In Trading with $500 you can control $50,000 capital to trade with after leverage ratio of 1:100
For $1,000 Account
With 1:100 trading leverage when you open an account with $1,000 you'll have capital of $100,000 to open stock trade transactions with - with 1:100 leverage it means your broker gives you $100 for every dollar which you have in your trading account. Hence, if you have $1,000 - 1,000*1:100 Leverage is equal to 100,000 that you can trade with.
In Trading with $500 you can control $100,000 capital to trade with after leverage ratio of 1:100
What's the Best Leverage to use when stock indices trading? - 100:1 Leverage
About Leverage
The more leverage you as a trader use, the greater the profit/loss
The less leverage that you use the lesser the profit or loss
It's hence better to use less leverage so that to minimize the risks involved. The higher the leverage used the greater the risks. This is one of the leverage guide-lines not to trade with more than 5:1 leverage.
In leverage guide-lines: It's always advisable to stay below 10:1 which is still high, most professional equity managers use 2:1 leverage in their account.
To Learn and Know More about Leverage and Margin - How to Read the Topics Below:
Leverage and Margin Explained
