What is The Difference Between Maximum Stocks Leverage and Used Stock Leverage?

You should note that there is a difference between maximum stocks leverage ( stocks leverage given by your broker which is the highest stocks leverage you can trade with if you select to) and used stocks leverage ( stocks leverage depending on the lots you've opened/open trade positions). One is broker's (Maximum) and the other is trader's (Used). To explain this concept we shall use the stocks example above:

If your stocks broker has given you 100:1 Maximum stocks leverage, but you only open trading lots of 100,000 dollars then Used stocks leverage is:

100,000 dollars : 10,000 dollars (your money)

10:1 Used Stocks Leverage

You have used 10:1 stocks leverage, but your maximum stocks leverage is still 100:1. This means that even if you're given 100:1 Maximum stocks leverage or 200:1 Maximum stocks leverage , you do not have to use all of it. It is best to keep your used stocks leverage to a maximum of 10:1 but you will still choose 100:1 maximum leverage option for your stocks trading account. The extra stocks leverage will give you what we call Free Stock Margin, As long as you've some Free margin on your trading account then your stock trades will not get closed by your stocks broker because this margin requirement will remain above the required level.

When it comes to stocks trading one of your stocks rules: stocks money management guidelines on your stocks plan should be to use below 5:1.

Stocks Leverage Example

The example illustrated and explained below, the set stock leverage is 100:1, the margin which is 1% is $2683.07, therefore the total amount controlled by the trader is: $268,307 - this is because with this leverage the trader has used little of his money & borrowed the rest, with this set at 100:1, the trader is using 1 % of their capital, this 1% is equal to $2683.07, if 1% is equal to $2683.07 then 100% is $268,307

MetaTrader 4 Stocks Platform - What is The Difference Between Maximum Stock Leverage and Used Stocks Leverage?

In the above image examples, the trader is using $2683.07, the total controlled amount is $268,307, but trading account equity is 16,116.55, therefore used stock leverage is ($268,307 divide by 16,116.55) = 16.64 : 1

16.64 : 1

In the stock account above even though the maximum stocks leverage set stocks trading leverage is 100:1, Used stocks leverage is 16.64 : 1