How to Calculate Stocks Trading Margin

What is Margin Stocks Trading Account?

The definition of Stock Leverage is having the ability to control a big amount of money using very little of your own money & borrowing the rest - this is what makes the stocks market to attract many investors.

We shall explain stock trading leverage first & then explain stock trading margin in this learn how to calculate stocks leverage & stock margin tutorial.

Example:

We shall us this example to explain what stock leverage is? If your stock broker gives you stock leverage of 100:1 (this is best option to select as a maximum for any account)

This means you borrow 100 dollars for every dollar you've in your stocks trading account.

To put in another way your stock broker gives you 100 dollars for every 1 dollar in your trading account. This is what is known as stocks trading leverage.

This means if you open an account with $1,000 & your stocks leverage is 100:1, then you get $100 for every $1 you that you've in your stock account, the total amount which you'll control is:

If for 1 dollar the broker will give you 100

Then if you have 1,000 you will get a total of:

$1,000 * 100 = 100,000 dollars

Now you control 100,000 dollars of Investment

Most new stock traders ask what stock leverage is best stock leverage for 1,000 dollars, or 2,000 dollars, or 5,000 dollars stock trading account? - The best stock leverage option to choose when opening a live stocks account is always 100:1 & not 400:1.

What's Stock Trading Margin?

This is the amount of money required by your stocks broker so as to allow you to continue trading with the amount borrowed.

In other words the question what's stock trading margin in Stock Trading? can be explained as money required to cover open stocks trades & is expressed in percent. For 100:1, the amount you will control is 100,000 dollars as explained in above examples.

Now can you compare a investing $1,000 with another one that is investing $100,000? Obviously Not. This is how it works: it takes you from that retail investing $1,000 to that investor investing $100,000. Where does this extra cash come from? - You borrow it from your stock broker in what is simply known as Stock Trading Leverage. This money that you borrow, you borrow it against the $1,000 dollar of your own money which you deposit with your stocks broker. If you were to explain what this stock trading leverage means - then it is the ability to control a large amount of money using very little of your own money & borrowing the rest. Otherwise, if you were trade Stock Trading without this stock trading leverage it would not be as profitable as it is, in fact you can still choose not to use stocks leverage, using 1:1 option but you would not make money it would take too long to make any profit.

Example of how to calculate stocks leverage & stock trading margin:

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

If leveraging = 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 capital is $1,000 after stock leverage you now control $100,000 - $1,000 is what percent of $100,000 - it is 1 %) that is your stock trading margin requirement for your stocks trading account.

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