![]() How to Use the Leverage & Margin Calculator Most professional traders use a low leverage ratios, up to 5:1, or none at all, and a modest risk percentage per trade (2%). Caution: Higher leverage ratios means higher risks. Of course, traders can also use little leverage, like 30:1 or 5:1, or no leverage at all. For example, if the cost to open a trading position of 0.01 lots of EUR/USD is $1,000 without leverage, and a broker offers 100:1 leverage, then a trader must use only $10 as margin. With 100:1 leverage a trader can open a position 100 times greater than they could without leverage. A margin call warning from the broker may or may not precede such liquidation. When losses cause a trader's margin to fall below a pre-defined stop out percentage, one, or all open positions, are automatically closed by the broker. Its purpose is to protect the broker from losses. It is not a fee or cost and is freed up again once the trade is closed. ![]() Margin is the capital a trader must put up to open a new position. If you trade using the full 100:1 leverage, a price movement of 100 times less will produce the same profit or loss. For example, buying the EUR/USD at 1.0000 with no leverage, to take a total loss the price must go to zero, or to 2.0000 to double your investment. ![]() Leverage will amplify potential profits and losses. ![]() Leveraged trading is also called margin trading. Leverage allows a trader to control a larger position using less money (margin) and therefore greatly amplifies both profits and losses. Use this handy Forex & Crypto Margin & Leverage Calculator to calculate accurately the amount of funds required to open a trading position, or used to open a new trade, based on the lot size and the available leverage offered by your broker. ![]()
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