What's Indices Margin Trading?

What's Indices Margin Trading Account?

The meaning of Leverage is having the ability to control a large amount of money using very little of your own money and borrowing the rest - this is what makes the indices market to attract many investors.

We shall explain indices leverage first & then explain indices margin in this learn how to calculate stock indices trading leverage & indices margin tutorial.

Example:

We shall us this example to explain what indices trading leverage is? If your broker gives you stock indices leverage of 100:1 (this is the best option to select as the maximum for any account)

This means you borrow 100 dollars for every dollar you have in your Indices account.

To put in another way your indices broker gives you 100 dollars for every 1 dollar in your account. This is what is referred to as stock indices trading leverage.

This means if you open an account with $1,000 & your stock index leverage is 100:1, then you get $100 for every $1 you that you have in your indices account, the total amount which you will control is:

If for 1 dollar the broker gives you 100

Then if you have 1,000 you'll get a total of:

$1,000 * 100 = 100,000 dollars

Now you control 100,000 dollars of Investment

Most new indices traders ask what stock indices leverage is best stock indices leverage for 1,000 dollars, or 2,000 dollars, or 5,000 dollars indices account? - The best stock indices leverage option to select when opening a live Indices account is always 100:1 and not 400:1.

What's Indices Trading Margin?

This is the amount of money required by your broker so that to allow you to continue trading with borrowed amount.

In other words the question what is indices margin in Indices Trading? can be described as the money required to cover open stock indices trades & is expressed in percentage. For 100:1, the amount you will control is 100,000 dollars as explained in the above examples.

Now can you compare a investor investing $1,000 with another one that's investing $100,000? Obviously Not. This is how it works: it takes you from that retail investor investing $1,000 to that investing $100,000. Where does this extra cash come from? - You borrow it from your indices broker in what's simply known as Leverage. This money that you borrow, you borrow it against the $1,000 dollar of your own money that you deposit with your indices broker. If you were to explain what this indices trading leverage means - then it is ability to control a large amount of money using very little of your own money and borrowing the rest. Otherwise, if you were trade Indices without this indices trading leverage it would not be as profitable as it is, in fact you can still choose not to use stock indices leverage, using the 1:1 trading leverage option but you would not make money & it would take too long to make any profit.

Example of how to calculate stock indices trading leverage & indices margin:

Indices Margin required in this case is 1,000 dollars (your money) if it's expressed as a percentage of 100,000 dollars which you control it is:

If leverage = 100:1

1,000 / 100,000 * 100= 1%

Stock Indices Margin required = 1%

(1/100 *100= 1%)

'Trade Forex Trading - Please simplify because I am Beginner'

(Simplify - your capital is $1,000 after stock indices leverage you control $100,000 - $1,000 is what percent of $100,000 - it is 1%) that's your indices margin requirement for your indices trading account.

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