When conducting margin trading, BrokerJet will provide you with a major part of the total value of a position so that you can trade leveraged securities. Margin trading allows you to maximize your profits if you have a proper risk management plan.
How much leverage do I have?
The default leverage for all clients at BrokerJet is 1:50. This means you can borrow 50 times your deposit to make a trade. Clients will never lose more funds than they deposited – we provide solid negative balance protection. If you trade with us for at least six months, you may request leverage as high as 1:200 or 1:500 on Forex. You can also request a lower leverage of 1:25.
How does it work?
Let’s imagine you as a client have $1000 on balance in your account. You decide to purchase 100 shares of a $40 stock on 1:50 margin.
|To purchase 100 shares of stock at $40 on 1:50 margin||You invest $80||Brokerjet.asia provides $3920||Total purchase is $4000|
|1) Stock price rises to $50||$80 of your investment + $3920||Net Profit after returning broker's funds is $1000||Total stock value $5000|
|2) Stock price falls to $39||$ 900 remains + $3920 provided by broker||- $100 loss on balance||Total stock value $3900|
|3) Stock price falls to $35||$500 remains + $3920 provided by broker||- $500 loss on balance||Total stock value $3500|
|4) Stock price falls to $30||0 remains + $3920 provided by broker||- $1000 loss||Total stock value $3000|
Example 4 is theoretical in nature, because in real life you would receive a margin call after your funds have dropped below 50% of original investment and your position would be closed. The negative balance protection makes it impossible for you to ever be indebted to your broker or lose more money than you deposited.
As you can see, trading on margin can be used to magnify profits, but losses can also be considerable. In order to prevent margin calls, keep margin ratio at 50%, invest in companies with proven record, and have a plan in case the market turns against you.
How to check your margin and leverage on MetaTrader4
To check the margin requirements on the trading platform, click “Market Watch”. The panel will show instruments or symbols. Right-click on any symbol and choose “Specification”. Individual margin requirements will be shown there.
Account leverage can be checked by moving the mouse pointer over your account number and opening “Navigator” which will show your actual leverage.