Basic Knowledge to Invest
Lecciones 4 Leverage
Leverage
Investing in CFD assets involves investing by amount and units and often includes using Leverage.
Leverage allows investors to invest in assets with a smaller amount of money while obtaining the desired number of units. It also helps them acquire more units than the amount they invest.
What is Leverage?
Leverage is a tool brokers offer investors to increase an asset's trading power with less money. Increasing the trading power of assets will help you have a higher chance of making a profit, but you may also cause losses.
Advantages and Disadvantages of using leverage.
The advantages of using leverage:
1. Trading in larger volumes: When using leverage, investors can open larger positions than investing in assets without leverage. You invest a smaller amount of money but get more units.
2. Increased profit opportunity: The potential for higher profits is greater when investors succeed.
The disadvantages of using leverage:
1. High risk: Using leverage is high risk because you borrow investment funds from the broker. If your investment fails, you may lose more than you expected.
2. High overnight fees: Higher leverage increases your exposure, leading to higher overnight fees.
Risk warning :
*Using leverage comes with higher risks because it increases the risk of investing. If the investment fails, you may incur greater losses than expected.
*Trading CFD products are high-risk and unsuitable for all investors. You may lose money on the assets you invest. Please ensure you understand all the risks and consider them before investing.