What Is Leverage?
Leverage is the ratio between the volumes being traded, i.e. the total investment amount with the multiplier applied, and the used margin amount.
What is the maximum leverage for each asset class?
a. 30:1 for major currency pairs (3.33% margin)
b. 20:1 for minor currency pairs, gold, and major indices (5% margin)
c. 10:1 for commodities other than gold and minor indices (10% margin)
d. 5:1 for individual equities and other reference values (20% margin)
e. 2:1 for cryptocurrencies (50% margin)
How will this affect my trading account with Libertex?
When you trade any asset, the leverage applied depends on the class such an asset belongs to.
With higher leverage, you need less funds (margin) to open a position, which allows you to open big trades while investing just a fraction.
Conversely, if the leverage is low, you will need more own funds to open your position.
How do I know the total amount of the trades I can open when my account balance is N?
Maximum Amount = Free Margin * Max Leverage for the asset class in question
Let's assume now your account balance is again €10,000, but you want to open multiple trades on EUR/USD.
This is a major currency pair, so the maximum leverage here is 30:1.
Thus, your maximum overall trade amount with multiplier applied is 10,000*30=€300,000.
So, you are free to open any number of EUR/USD trades you want, but their total value, including the multiplier, must not exceed €300,000.
Let's assume your account balance is again €10,000, and you want to open multiple trades on gold.
For minor currency pairs, gold, and major indices the maximum leverage is 20:1.
Thus, your maximum overall trade amount with multiplier applied is 10,000*20=€200,000.
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