Leverage is a powerful tool in trading that allows you to control a larger position with a smaller amount of capital. At MH Markets, we offer two types of leverage: Fixed and Floating. You can decide which one you want to use for each trading account you create and change it after the trading account creation. Here’s what they mean and how they affect your trading and margin requirements.
What is Fixed Leverage?
- Definition: Fixed leverage remains constant regardless of your account balance or trading volume.
- Example: If your account is set to 1:500 leverage, it will stay at that level for all trades.
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Impact on Margin:
- Margin requirement is predictable and does not change with trade size.
- Easier for traders to plan and manage risk.
What is Floating Leverage?
- Definition: Our floating leverage model automatically adjusts ratios based on real-time equity.
- Example: For smaller equity, leverage might be 1:2000. As equity grows, leverage may reduce to 1:500 or lower.
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Impact on Margin:
- Margin requirements increase as trade size grows. More information on the Floating Leverage adjustment you can find here: Floating Leverage Auto Adjustment
- Helps reduce risk for large positions but requires careful monitoring.
Note that both fixed and floating leverage are affected by the Event-Based
Margining (EBM)
How Leverage Affects Trading and Margin
Higher Leverage:
- Lower margin requirement per trade.
- Greater exposure and potential profit — but also higher risk.
Lower Leverage:
- Higher margin requirement per trade.
- Reduced risk but limits position size.