How to avoid using Leverage on CFDS?

[TheBlitzLox]

Thanks, this is what I was missing, it didn’t make sense that I could trade large amounts of units with a low deposit, unless somehow i am being borrowed money. This is where the Leverage thing comes in but I have not read enough on it.

Since you say I am under leveraged in this case, does that mean there is a way to use leverage to my advantage without falling in debt with the broker?

[Kamajafx]

To be honest I am not interested in crypto currencies but thanks for the information

Don´t worry you can just work with fiat currencies.

[Clint]

Let me present you with a question and maybe you can help me: if my account balance is £5,000 and I wish to buy 100,000 units of a currency. Is it possible to do WITHOUT using leverage? Has it got something to do with the STOP LOSS pip value?

To answer your question, in short, NO you cant open a 100,000 unit position in GBP with a £5K account using 1:1 leverage.

In order to trade 100,000 units at 1:1 leverage your notional value … must equal your account balance. In the above example you would need a bank balance of £100,000 to trade 100,000 units (1 std lot) at 1:1 Leverge

[@clint is this right ;)]

Hello Bacon,

What you wrote is correct, except for the phrase per pip (which I deleted in your quote, above). Pips and pip-values do not factor into the simple formula for actual leverage used –

Actual leverage used = notional value / account balance

For every GBP-pair except EUR/GBP, one standard lot (100,000 units of GBP) has a notional value of £100,000.

(For the EUR/GBP pair, the notional value of one std. lot is 100,000 * EUR/GBP price.)