What Is Admiral Market Leverage
Leveraging is the process of borrowing funds to facilitate an investment, which if profitable, will magnify your return. In trading, leverage allows professional and retail traders access to large position sizes, even with small deposits.
To trade with leverage, you will borrow money from your broker. The borrowed money allows you to increase your buying power. After closing the trade, you must return the money to your broker and receive your profit. Conversely, you are liable for any loss incurred.
Traders must put down a fraction of their trade’s value as a deposit to access and maintain leverage. This is also called margin. The leverage is expressed as a ratio. For example, a 1:500 leverage means you can open a position that is 500 times the size of your margin. By implication, you can amplify your profit or losses by multiplication of 500.
Admiral markets offer leverage so that traders can open larger positions. Since the broker earns money on swaps, spreads, and commissions, opening large positions would mean more fees for them. Check here for our article on Admiral Markets spread and fees.
As you may have guessed, there are benefits and disadvantages of using leverages. The most crucial is that it can magnify your profit or loss if the market moves towards or away from your direction. On the upside, it frees enough part of your capital so you can use it for other trading purposes.