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Filter:Leverage

Category – Leverage

Leverage is the use of borrowed funds to increase the potential return on investment. In trading, leverage allows traders to control larger positions with a smaller initial capital outlay, amplifying both profits and losses. Leverage is commonly used in forex, stock, and futures trading. While it can enhance returns, it also increases risk, as market fluctuations can result in significant losses. Traders must carefully manage leverage to avoid margin calls and ensure that risk is within their tolerance levels.

MARGIN CALL OBLIGATIONS

Margin Call Obligations are additional funds a trader must deposit to meet margin requirements when account equity falls below the maintenance level. Failure to meet these obligations can lead to the liquidation of positions.

MARGIN FEE COMPONENTS

Margin Fee Components include any broker fees related to margin trading, excluding interest. These may include margin maintenance fees or account fees.

BROKER FEES

Broker Fees are unpaid charges, such as trading commissions or account fees. These reduce account equity until resolved and must be managed to avoid impacting available funds.

MARGIN DEBT

Margin Debt is the specific amount borrowed under margin agreements to fund trades. It enables leveraged positions and buying power but comes with repayment obligations and risks.

BORROWED AMOUNTS FOR TRADE

Borrowed Amounts for Trade is the total amount borrowed from brokers to fund trading activities. It includes margin debt, margin call obligations, and other broker-provided borrowing mechanisms.

LIABILITIES

Liabilities are obligations such as margin debt, interest, short sale proceeds, loaned funds, broker fees, and margin calls. They reduce account equity and influence the net liquidation value of a trading account.

MARGIN REQUIREMENT PERCENTAGE

Margin Requirement Percentage is the percentage of a trade’s value that must be maintained as collateral. It ensures sufficient funds are allocated to support leveraged or margin-based positions.