⁉️Is Margin the Same as Leverage
✅Answer: No, margin is not the same as leverage, but they are closely related
Here’s the difference simply:
✅Leverage: It is a tool that allows you to trade with more money than your actual capital
🔴Example:
If your balance is 100$ and you use a leverage of 1:10, you can open a trade worth $1000
✅Margin: It is the actual amount that is held from your balance as collateral when using leverage
In the previous example, the margin is the 100$ you put up to open the trade for $1000
The relationship between them:
• Leverage = The percentage of purchasing power you take
• Margin = The amount you pay out of your pocket to open the trade
Illustrative example:
If you opened a trade for $1000
And the leverage is 1:10 👈 You only need 100$ as margin, meaning the higher the leverage, the lower the required margin 👈 But the risk also increases
CMX Academy 🎓