Leverage Trading : Strategies, Benefits and Risks
Leverage Trading allows investors to invest in larger positions and get bigger exposure in the market than the amount they initially deposited. It is considered a powerful tool by professional traders and a risk for beginners with little or no knowledge of how to use leverage in trades. In simple words, it is a form of trading where you borrow money or increase your shares, more than what you can afford in a trade for cash payments. However, leverage trading comes with several risks and is not easy to practice without prior experience and knowledge about the market. What are the few ways to trade with leverage? Futures contracts – Futures contracts allow you to buy and sell an asset in the future at a specific time and price. To establish a futures contract position, you need an initial margin and a regular mark-to-market settlement to determine profits and losses. Margin trading – Margin trading is the usual way to trade with leverage on forex , stocks , cryptocurrencies , or ...