I have recently been reading up on leverage and Margin Required and i still don’t think I’ve got my head around it properly for some reason. So my understanding is leverage allows you to open a position much larger than your initial deposit to open your position. Margin is the initial deposit required to open your position before leverage is applied. I hope that’s right?
My next question is how do people protect there capital when using leverage to ensure they don’t blow up there accounts?
Keep it simple. Use as higher leverage as possible. Why? Because blowing your account is not possible if you follow your rules. You should only trade about 2% of your account on any one trade. So how can you blow it?
And the more leverage you have the more simultaneous trades you can open. As margin runs out quickly the higher the leverage the better.