“Leverage” is having the ability to control a large amount of money using none or very little of your own money and borrowing the rest.
For example, to control a $100,000 position, the broker will set aside $1,000 from your account. Your leverage, which is expressed in ratios, is now 100:1.
You’re now controlling $100,000 with $1,000.
Let’s say the $100,000 investment rises in value to $101,000 or $1,000.
If you had to come up with the entire $100,000 capital yourself, your return would be 1% ($1,000 gain / $100,000 initial investment).
This is called 1:1 leverage.
But if you’re leveraged 100:1, the broker only had to put aside $1,000 of your money, so your return is 100% ($1,000 gain / $1,000 initial investment).
Depending on the account type you open at ClubFX, you can choose the leverage on a scale from 1:1 to 1:1000:- Margin requirements do not change during the week, nor do they widen overnight or at weekends. Moreover, at ClubFX you have the option to request either the increase or the decrease of your chosen leverage.