What is the difference between Leverage and Margin requirement?

Leverage and Margin are similar in nature but state a different point of view.

Leverage intends to show someone’s Buying power with a given amount of Funds, while Margin states the Funds needed to open or sustain a position open.

Leverage – Example:

With a 1:100 Leverage and 1,000 EUR in my balance, I can open a trade with a size of 100 times bigger than my balance.

In that case, I’m able to open a trade of 100,000 EUR.

Margin – Example:

Margin is the amount needed in my balance to open a trade of a given Size.

So, if I want to open a trade of 100,000 EUR, I need to have at least 1,000 EUR in my balance.

Margin is stated as a percentage while Leverage is stated as a ratio, but they basically show the same thing. 

Leverage

Margin

1:500

0.2%

1:200

0.5%

1:100

1%

1:50

2%

1:30

3.33%

1:10

10%

Have more questions? Submit a request

0 Comments

Article is closed for comments.