Margins and Leverage
Investing in margins means that you are not using all your capital. You invest a portion of what is needed to open the position and the other part is boosted by the leverage. These two concepts are related to one another. Once you have your account with Ex 67, we will provide you with extra buying power.
Leverage is one of the trading strategies which helps traders to use borrowed capital for the trading service provider. It increases the potential return of your invested capital.
How Leverage Works
As explained before, leverage is the use of the borrowed capital in order to make the investment you want. Of course, this is not so easy, bigger chances to win bring bigger risk.
Leverage is used by both investors and traders. We offer different leverages, depending on the account you chose. It starts from 1:100 up to 1:500. Traders create a basket of assets to trade on the market and they are allowed to take advantage of the leverage power for any of the assets.
Some people are not comfortable using leverage, they are usually the traders who are more for long term investments and waiting to have the return is not a problem for them. Of course, you can trade without using leverage.
The Difference Between Leverage and Margin
To explain through a simple example, when you buy a house, you make a payment and borrow the rest. What you have borrowed is called leverage. So, leverage is the money you take from somewhere and use it to achieve your goals.
In a Forex transaction, if you are offered a 25:1 leverage, it means that for everyone dollar of yours you borrow 24 dollars. If you want to place a position worth $1000, at a 25:1 leverage, you are using $40 of your own money and $960 borrowed (boosted by the leverage).
If leverage was the amount of borrowed money, margin is your money you put in. Also, margin is referred to the amount of money which is needed to necessarily be in the account in order to keep it open.