MT4 Stocks Margin Level : Example of How to Calculate Stocks Leverage on MT4
Margin required in this case is 1,000 dollars (your money) if it's expressed as a percent of 100,000 dollars which you control it is:
If stocks leverage = 100:1
1,000 / 100,000 * 100= 1%
Margin required = 1%
(1/100 *100= 1%)
"Trade Forex Trading - Please simplify because I am Beginner"
(Simplify - your stocks capital is $1,000 after stocks leverage you control $100,000 - $1,000 is what percent of $100,000 - it is 1%) that is your stocks margin requirement for your stocks trading account.
The stocks margin example illustrated and explained below, the set stock leverage is 100:1, the stocks margin which is 1% is $2683.07, therefore the total amount controlled by the trader is: $268,307 - this is because with this leverage the trader has used little of his money & borrowed the rest, with this set at 100:1, the trader is using 1 % of their account capital, this 1% is equal to $2683.07, if 1% is equal to $2683.07 then 100% is $268,307
MetaTrader 4 Stocks Margin Level : Example of How to Calculate Stocks Leverage in MT4
- If = 50:1 Stocks Leverage - Used Stocks Leverage
Then stocks margin requirement = 1/50 *100= 2%
If you have $1,000,
1,000* 50 = $50,000.
1,000 / 50,000 * 100= 2%
(Simplify - your stocks capital is $1,000 after stocks leverage you now control $50,000 - $1,000 is what percentage of $50,000 - it's 2%) that is your stocks margin requirement
- If = 20:1 Stock Leverage - Used Stocks Leverage
Then the stocks margin requirement = 1/20 *100= 5%
If you have $1,000,
1,000* 20 = $20,000.
1,000 / 20,000 * 100= 5%
(Simplify - your stocks capital is $1,000 after stocks leverage you now control $20,000 - $1,000 is what percent of $20,000 - it is 5%) that is your stocks margin requirement
- If = 10:1 Stocks Leverage - Used Stocks Leverage
Then the stocks margin requirement is = 1/10 *100= 10%
If you have $1,000,
1,000* 10 = $10,000.
1,000 / 10,000 * 100= 10%
(Simplify - your stocks capital is $1,000 after stocks leverage you now control $10,000 - $1,000 is what percent of $10,000 - it is 10 %) that's your stocks margin requirement
What's The Difference Between Maximum Stock Leverage and Used Stocks Leverage?
However, you should note that there's a difference between maximum stocks leverage ( stocks leverage given by your stocks broker which is the highest stocks leverage you can trade with if you select to) and used stocks leverage ( stocks leverage depending on the lots you've opened/open trade positions). One is the broker's (Maximum Stocks Leverage) & the other is stocks trader's (Used Stocks Leverage). To explain this stocks used stocks leverage and maximum stocks leverage concept we shall use the stocks example above:
If your stocks broker has given you 100:1 Maximum Stocks Leverage, but you only open a trade of 10,000 dollars then Used Stocks Leverage is:
10,000 dollars: 1,000 dollars (your money)
10:1
Your have used 10:1 Stocks Leverage, but your maximum stocks leverage is still 100:1 Stocks Leverage. This means that even if you're given 100:1 Maximum Stocks Leverage or 400:1 Maximum Stocks Leverage, you do not have to use all of it. It is best to keep your used stocks leverage to a maximum of 10:1 but you will still choose 100:1 maximum stocks leverage option for your stocks trading account. The extra stocks leverage will give you what we call Free Stock Margin, As long as you have some Free margin on your stocks account then your open stock trades will not get closed by your stocks broker because this margin requirement will remain above the required level.
When it comes to stocks trading one of your rules: stocks money management guidelines on your stocks plan should be to use stocks leverage below 5:1.
In the above MT4 stocks screenshot example, the trader is using $2683.07, the total controlled amount is $268,307, but stocks account equity is $16,116.55, therefore used stock leverage is ($268,307 divide by 16,116.55) = 16.64 : 1
16.64 : 1 Used Stocks Leverage
Stocks Margin accounts allows traders to control a large amounts of stocks units using leverage using little of their own capital while borrowing the rest
Obtaining this stocks account will enable you to borrow money from the broker to trade stocks trading lots with.
Amount of borrowing power your trading account gives you what is known as " stocks leverage", and is usually expressed as a ratio - a ratio of 100:1 trading leverage means you can control resources worth 100 times your deposit amount.
What this means in Stocks terms is that with 1% margin in your stocks trading account you can control a trade worth $100,000 with a $1,000 deposit.
However, Trading this margin stocks account increases both potential for profits as well as losses. In Stocks you can never lose more than you invest, losses are limited to your deposits & usually trading brokers will close-out a trade that extends beyond your deposit amount by executing a margin call. Stocks traders must therefore try to keep their trading margin requirement level above that required. By using stocks money management guidelines and keeping your used stocks leverage below 5:1.
