Double - Leverage
It is the ratio between the value of the item that you want to be traded between the value of the bond that asks you to pay (used margin) to allow you to trade in this commodity.
The multiplier can be calculated by the following equation:
Doubling the number of contracts * = per contract size / margin User
If we assume that the car agency will allow you to trade a car and one (1 Lot) valued at $ 10,000 compared to be deducted from your account the amount of $ 1,000 for each user Lott margin .. You can calculate the multiplier ratio:
Doubling the number of contracts * = per contract size / margin User
= 1 * $ 10,000 / $ 1000 = 10
Which can be expressed as 1:10 for every $ 1 you pay margin user will be multiplied ten-fold, ie for every $ 1,000 paid by a margin user you can trade in a commodity worth $ 10,000
Q: I suppose that there are cars Agency will allow you to trade four cars each worth $ 10,000 for every $ 1,000 paid by the user how much margin leverage ratio provided by this agency?
Answer: multiplier = number of contracts * contract size / margin User
= 4 * $ 10,000 / $ 1,000 = 40
And it can be expressed as 40:1 means that for every $ 1,000 is deducted user you can trade margin commodity worth $ 40,000 which is equivalent to 4 cars at once.
The leverage ratio that could give you vary from one institution to another, one of the basic information that Starafha before handling the marginal system.
