What is The Difference Between Maximum Leverage & Used Leverage?

You shouldn't that there is a difference between maximum leverage ( leverage given by your broker which is the highest leverage you can trade with if you select to) & used leverage ( leverage depending on the lots you've opened/open trade positions). One is broker's (Maximum) and the other is trader's (Used). To explain this concept we shall use the example above:

If your broker has given you 100:1 Max leverage, but you only open trading lots of $100,000 then Used leverage is:

100,000 : $10,000 (your money)

10:1 Used Leverage

You have used 10:1 leverage, but your maximum leverage is still 100:1. This means that even if you are given 100:1 Maximum leverage or 200:1 Max leverage, you do not have to use all of it. It's best to keep your used leverage to a maximum of 10:1 but you'll still select 100:1 maximum leverage option for your trading account. The extra leverage will give you what we call Free Stock Margin, As long as you've some Free margin on your trading account then your stock trades won't get closed by your broker because this margin requirement will remain above the required level.

When it comes to trading one of your stocks rules: money management rules on your stocks plan should be to use below 5:1.

Leverage Example

The example shown & described below, the set stock leverage is 100:1, the margin which is 1 percent is $2683.07, therefore the total sum controlled by the trader is: $268,307 - this is because with this leverage the trader has used little of his money & borrowed the rest of the amount, with this set at 100:1 ratio option, the trader is using 1 percent of their trading account capital, this 1% is equal to $2683.07, if 1 percent is equal to $2683.07 then 100 % is $268,307

MetaTrader 4 Platform - What is The Difference Between Maximum Leverage & Used Leverage?

In the above image examples, the trader is using $2683.07, the total controlled amount is $268,307, but trading account equity is 16,116.55, therefore used leverage is ($268,307 divide by 16,116.55) = 16.64 : 1

16.64 : 1

In the account above even though the maximum leverage set trading leverage is 100:1, Used leverage is 16.64 : 1