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Old 11-10-2008, 03:20 PM   #8 (permalink)
David Waring
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Hi pkevl,

No worries I am glad to help.

You are correct that looking at the minimum margin requirement then because you only have to put up $50 to trade $10,000 this is 200 to 1 leverage. So simply from the standpoint of what I am explaining in this video which is determining leverage based on the used margin column (which is the minimum you have to have in your account to keep the position open, you are understanding things correctly.

What I think it is also important to understand here however is that traders normally look at how much leverage they are using in relation to how much money they have in their account, which is seperate from the minimum margin requirement required to trade.

In other words just because your minimum margin requirement is 200 to 1 whether you have $1000 in your account or $10,000 does not mean that two traders with these differing account sizes should trade the same position size.

Hope that helps and let me know if you still have questions.

Best Regards,
Dave
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Disclaimer: Trading is risky and can result in substantial financial loss. As always my posts are simply one traders opinion and should not be taken as trading advice. I am not a financial adviser so everyone please do their own analysis and take responsibility for their own trades.
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