How Leverage Works in the Market?

The standard leverage ratio provided by most brokers is 100:1 leverage.

This indicates that a trader can borrow $100 from their broker for each $1 in their trading account.

For this specific leverage ratio, the associated margin requirement is calculated at 1%: one divided by one hundred equals one percent.

A trader can also choose the 50:1 leverage

A 50:1 leverage means you borrow $50 for each $1 in your account from the broker.

For the stated leverage, this implies that the required margin for an account is 2% (since 1/50 equates to 2%).

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Leverage & Margin Explained with Example

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