Release date: 2020-04-15 15:51
Leverage is a virtual credit provided by the broker to a client. Leverage affects your margin requirements, i.e. the higher the ratio is, the lower required margin will be, i.e. with leverage 1:500 your initial margin will be 500 times less than the contract size. For example, the current EUR/USD bid is 1.13511 and you would like to open 0.5 lots Sell order. If your leverage is 1:500 the margin required for such order can be calculated like this: 50 000 EUR (contract size) * 1.13511 (current Bid)/500(your leverage)= 113.51 USD. With 1:200 leverage, the required margin is 283.78 USD.