What is The Difference Between Maximum CFDs Leverage & Used CFDs Leverage?
You should note that there is a difference between maximum cfds trading leverage ( cfd leverage given by your broker which is the highest cfd leverage you can trade with if you select to) & used cfds trading leverage ( cfd leverage depending on the lots you've opened/open trade positions). One is broker's (Maximum) and other is trader's (Used). To explain this concept we shall use the cfd example above:
If your cfd broker has given you 100:1 Maximum cfd leverage, but you only open trading lots of 100,000 dollars then Used cfd leverage is:
100,000 dollars : 10,000 dollars (your money)
10:1 Used CFD Leverage
You have used 10:1 cfd leverage, but your maximum cfd leverage is still 100:1. This means that even if you're given 100:1 Maximum cfds leverage or 200:1 Maximum cfd leverage , you do not have to use all of it. It is best to keep your used cfd leverage to a maximum of 10:1 but you'll still choose 100:1 maximum leverage option for your cfds trading account. The extra cfd leverage will give you what we call Free CFD Margin, As long as you've some Free margin on your trading account then your cfds trades will not get closed by your cfds trading broker because this margin requirement will remain above required level.
When it comes to cfd trading one of your cfd rules: cfds money management trading rules on your cfd plan should be to use below 5:1.
CFDs Leverage Example
The example shown below, the set cfd trading leverage ratio is 100:1, the margin which is 1% is $2683.07, therefore the total amount controlled by the trader is: $268,307 - this is because with this leverage the trader has used little of his money & borrowed the rest, with this set at 100:1, the trader is using 1% of their account capital, this 1% is equal to $2683.07, if 1% is equivalent to $2683.07 then 100% is $268,307
MT4 CFD Platform - What is The Difference Between Maximum CFDs Leverage & Used CFD Leverage?
In the above image example, the trader is using $2683.07, the total controlled amount is $268,307, but account equity is 16,116.55, therefore used cfd leverage is ($268,307 divide by 16,116.55) = 16.64 : 1
16.64 : 1
In the cfd account above even though the maximum cfd leverage set cfds trading leverage is 100:1, Used cfd leverage is 16.64 : 1
