Leverage

PanaceaCapitals allows you to trade various asset classes with leverage. Using leverage means that a trader is borrowing money from the broker, enabling them to increase their exposure with bigger trades. However, the trader will be required to deposit a small percentage of the trading capital while the broker handles the rest. For example, if you wish to open a $5,000 trade, you can deposit 10% of the money or $500, while the broker will lend you the additional capital. If the market moves in your favor, you will make more profits. However, you stand to lose a lot if the trade doesn’t favor you.

When using leveraged trading, always keep in mind the margin amount required to maintain your position. The margin amount is usually stated as a percentage. In the above example, the margin amount is 10%. This means that you need to deposit 10% of the total trading amount to maintain your trade position. If you don’t use leverage to trade, you will need to deposit the entire $5,000 to maintain a market position of that same magnitude.

As explained above, you can make huge profits with leveraged trading if the market moves in your favor, yet it is vital to fully understand that your losses can be magnified if the trade moves against you.

Since there are benefits and disadvantages attached to trading with leverage, we advise traders to take the time to fully understand the implications of using leverage before they start trading. PanaceaCapitals allows you to trade a wide range of assets with attractive leverage and narrow spreads.