⁉️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 🎓

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