Leverage Calculator CFD
Types of Leverage in CFD
The meaning of cfd leverage is having the ability to control a big amount of money using very little of your own money and borrowing the rest - this is what makes the cfds trading market to attract many investors - CFD Trading Leverage Synonym - CFD Trading Gearing.
What does cfd leverage ratio of 1:100 mean?
When CFD Trading using trading leverage it means that as a trader you can open trades which are larger than if you were using only the amount of money in your trading account without cfds trading leverage.
With cfd leverage you can use your money that's in your cfd account to borrow from your online cfd broker through what's known as cfds leverage. For example if you have a cfd account with $100 dollars - you can use your $100 and borrow using the cfd leverage of 1:100, which means that you will borrow $100 from your cfd broker for every $1 in your cfd account and after leverage you will have $100*(1:100 CFD Leverage Ratio) = $10,000.
CFD Trading leverage is written in the forms of a ratio:
For examples leverage ratio of 1:100 or 1:50 or 1:10
Sometimes the leverage ratio can also be written as 100:1 or 50:1 or 10:1 depending on the broker you are trading with.
This leverage ratio just explains the amount of cfd trading leverage whether it is written 100:1 or 1:100.
CFD Trading leverage ratio of 1:100 means you have borrowed using 1:100 and increased your cfd capital 100 times.
Leverage of 1:50 means you have borrowed using 1:50 and increased your trading capital 50 times.
Leverage of 1:10 means you have borrowed using 1:10 and increased your cfd capital 10 times.
CFD Trading Leverage Examples:
We shall us this cfd example to explain what cfd leverage is? If your cfd broker gives you leverage of 100:1 (this is best option to select as the maximum cfd leverage for any cfd account)
This means you borrow 100 dollars for every dollar you have in your cfds trading account.
To put in another way your cfd broker gives you 100 dollars for every 1 dollar in your cfd account. This is what's known as cfds trading leverage.
This means if you open a cfd account with $2,000 and your leverage is 100:1, then you will get $100 for every $1 you that you have, the total amount of trading capital you'll control is:
If for 1 dollar the broker will give you 100
Then if you have 2,000 you will get a total of:
$2,000 * 100 = 200,000 dollars
Now you control 200,000 dollars of capital in your cfd account that you can open cfds trades with
Most new cfd traders ask what cfd leverage is best for 1000 dollars, or 5000 dollars, or 10,000 dollars cfd account? - The best option to select when opening a live CFD Trading account is always 100:1 & not 500:1.
About CFD Leverage
The more cfd trading leverage you use the greater the profits or losses
The less cfd trading leverage you use the lesser the profits or losses
It is therefore better to use less cfd trading leverage so as to minimize risks involved. The higher the cfd leverage used the higher the risk. This is one of the cfd trading leverage rules and cfd trading money management rules not to trade with more than 5:1 cfds trading leverage.
In CFD Trading leverage money management rules: It is always advisable to use cfd leverage ratio below 10:1 which is still high, most professional money managers use cfd leverage ratio of 2:1 meaning they trade only 2% of their cfds trading account.
To Learn about CFD Leverage & Margin:
CFD Trading Leverage Formula and CFD Trading Margin Formula
