Hi all, I’m new to the forum and a complete trading novice. I have a question I was hoping someone could help answer.
How do brokers offer leverage on small trading accounts - do they not risk losing huge amounts of money? If I have an account with a few hundred $$$'s and open a trade for $100 with 30x leverage, losing that trade would ultimately be a loss of $100 x 30, right?. Would I owe $3000 to the broker in this instance?
To put it simply, you will still lose 100$ (unless there’s a slippage etc.) but you will lose it faster because you can use bigger lot size. And remember, there’s a certain amount % of your equity that they need to hold to open a position. If your equity is not able to sustain that balance, margin call baby.