The principle of leverage in finance works so that it can do more and, most importantly, be easier. Financial leverage is the ratio of the trader’s money to the total amount of funds he trades. The legal nature of this service is that a broker provides funds that exceed their value several times. Using leverage allows you to get more income.
The leverage of financial leverage allows the trader to make transactions worth much higher than his capital in the account. Of course, the broker must protect his money, and the automated trading system sets the threshold for loss on the transaction, equal to the amount of your collateral. That is, if in the course of conducting operations in the stock market you suddenly suffer losses, they will never exceed this amount — you will lose your money, and the broker, risking nothing, will return there. This is quite true, and this situation is called a margin call — a loss-making position threatening you with losses, is closed. And if the operations in the market are profitable, then all the profit will remain to you, and the broker will get back only their loan funds.
The first thing to know when trading with credit leverage is that the leverage is different and its size depends not on the broker’s desire, but on each particular financial instrument and its liquidity. So if you are working with multiple assets, consider — conditions may be different.
Oanda leverage strategies for trading can be different. The simplest option: buy cheap, sell expensive. You analyzed the market and saw a profitable strategy that should prove profitable. You give the broker collateral and ask for leverage to operate the asset. After the transaction, you record a profit or loss and settle with the broker.
It is also important to know that the leverage of this broker depends on the country from which the user trades. It reaches 20:1 for currency pairs.
Don’t open big-deposit deals — allocate funds rationally according to your chosen strategy. Trade carefully and assess risks. And especially, do not try to develop fraudulent schemes using financial leverage — you will suffer huge losses. Regardless of the experience of the private investor, it is always worth exhibiting the so-called stop loss. This is the value at which the transaction must be closed, that is, the actual order of the trading system to record a profit or loss when the asset or traded instrument has reached a predetermined price level.
Thus, trading with credit leverage can be under any strategy. It is better to use automated trading systems to calculate the leverage of each paper and asset