MT4 CFD Margin Level: Example of How to Calculate CFD Leverage in MT4 Platform

Margin required in this case is 1,000 dollars (your money) if it is expressed as a percent of 100,000 dollars which you control it is:

If cfd leverage = 100:1

1,000 / 100,000 * 100= 1%

Margin required = 1%

(1/100 *100= 1%)

'Trade Forex Trading - Please simplify because I am Beginner'

(Simplify - your cfd capital is $1,000 after cfd leverage you control $100,000 - $1,000 is what percentage of $100,000 - it is 1 %) that is your cfd margin requirement for your cfds trading account.

The cfd margin example shown below, the set cfd trading leverage ratio is 100:1, the cfd 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 capital, this 1% is equal to $2683.07, if 1% is equivalent to $2683.07 then 100% is $268,307

MT4 CFD Margin Level: Example of How to Calculate CFD Leverage on MT4 Platform

• If = 50:1 CFD Leverage - Used CFD Leverage

Then cfds margin requirement = 1/50 *100= 2 %

If you have $1,000,

1,000* 50 = $50,000.

1,000 / 50,000 * 100= 2%

(Simplify - your cfd capital is $1,000 after cfd leverage you control $50,000 - $1,000 is what percentage of $50,000 - it is 2%) that is your cfd margin requirement

• If = 20:1 CFDs Leverage - Used CFD Leverage

Then the cfds margin requirement = 1/20 *100= 5%

If you have $1,000,

1,000* 20 = $20,000.

1,000 / 20,000 * 100= 5%

(Simplify - your cfd capital is $1,000 after cfd leverage you control $20,000 - $1,000 is what percentage of $20,000 - it is 5%) that is your cfd margin requirement

• If = 10:1 CFDs Leverage - Used CFD Leverage

Then the cfds margin requirement is = 1/10 *100= 10 %

If you have $1,000,

1,000* 10 = $10,000.

1,000 / 10,000 * 100= 10%

(Simplify - your cfd capital is $1,000 after cfd leverage you control $10,000 - $1,000 is what percentage of $10,000 - it is 10%) that is your cfd margin requirement

What is The Difference Between Maximum CFDs Leverage & Used CFDs Leverage?

However, you should note that there is a difference between maximum cfds trading leverage ( cfd leverage given by your cfds trading 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 the broker's (Maximum CFD Leverage) & the other is cfd trader's (Used CFD Leverage). To explain this cfd used cfd leverage and maximum cfd leverage concept we shall use the cfd example above:

If your cfd broker has given you 100:1 Maximum CFD Leverage, but you only open a trade of 10,000 dollars then Used CFD Leverage is:

10,000 dollars: 1,000 dollars (your money)

10:1

Your have used 10:1 CFD Leverage, but your maximum cfd leverage is still 100:1 CFD Leverage. This means that even if you're given 100:1 Maximum CFD Leverage or 400:1 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 cfd leverage option for your cfds trading account. The extra cfd leverage will give you what we call Free CFD Margin, As long as you have some Free margin on your cfd account then your open cfds trades will not get closed by your cfds trading broker because this margin requirement will remain above required level.

When it comes to cfds trading one of your rules: cfds money management trading rules on your cfd plan should be to use cfd leverage below 5:1.

In the above MetaTrader 4 cfd screenshot example, the trader is using $2683.07, the total controlled amount is $268,307, but cfd account equity is $16,116.55, therefore used cfd leverage is ($268,307 divide by 16,116.55) = 16.64 : 1

16.64 : 1 Used CFD Leverage

CFD Margin accounts allows traders to control a large amounts of cfd units using leverage using little of their own capital while borrowing the rest

Obtaining this cfd account will enable you to borrow money from the broker to trade cfds trading lots with.

The amount of borrowing power your account gives you what is known as ' cfd leverage", & is usually expressed as a ratio - a ratio of 100:1 leverage means you can control resources worth 100 times your deposit amount.

What this means in CFD terms is that with 1 % margin in your cfds account you can control a trade worth $100,000 with a $1,000 deposit.

However, Trading this margin cfd account increases both potential for trading profits as well as losses. In CFD you can never lose more than you invest, losses are limited to your deposits & usually online trading brokers will close-out a trade that extends beyond your deposit amount by executing a margin call. CFD traders must therefore try to keep their trading margin requirement level above that required. By using cfd money management rules and keeping your used cfd leverage below 5:1.