How 1:1000 leverage works?

Here is an example how 1:1000 leverage works. Let’s say you want to trade with $100,000 but you don’t have that much money. First, you need to register your own margin account. For example if the broker gives 1% margin, you will have to deposit 100$. However, this kind of trading is extremely risky and it is not recommended.

What is the maximum leverage ratio?

Thus, if the maximum leverage ratio is 1:1000, having $100 in the account, the trader can make transactions for purchase/sale of foreign currency or other financial instruments worth 1,000 times more than their own funds, that is, $100,000. In case of luck, the trader's profit will grow proportionally to the leverage.

How much money can you make with a leverage of 5?

In general, this is not bad. But using a leverage of 1:1000, the same $ 5 can buy is not 0.0005, but 0.5 Bitcoin. And your profit, accordingly, will be equal to $500. You will agree that this is not just good, but amazing - having risked just $5, you have earned $500!

What are the advantages and disadvantages of leverage?

The main advantage of leverage is that it gives a trader the freedom to maneuver in the market. Wherein: The larger the leverage ratio is, the more are the free funds you have! Substantially reduces risks. Even with a small deposit, you can add a variety of trading tools to your investment portfolio.