What is Leverage?

Leverage refers to the use of borrowing to amplify various types of small investments into larger market positions. Investors use leverage to try to get higher returns. If run properly, the final return minus arrears will be much higher than your initial cash investment. If the operation is improper, losses of the same magnitude may occur.

Where have you heard of leverage?

Options and others derivatives some financial products include leverage. Contracts for difference (CFD) are ideal for leveraged trading. A separate definition of leverage refers to a company's debt relative to its equity the scale.

The information you need to know about leverage...

Leverage is an investment model in which the investor only invests a portion of the total value of the required position and the balance is borrowed from the leveraged product supplier. The Size of this petty cash investment (I. E. Margin payments) depends on the asset class and market you wish to trade. Deep, liquid and relatively calm markets have lower margin requirements, which may be 5% or 7% of the value of the position, while volatile markets have higher margin requirements, it could be 10 percent or more.