Normal Leverage
Traditional leverage generally follows a fixed pattern, allowing you to use a set leverage ratio irrespective of the varying sizes of your trades. This can sometimes limit your ability to open additional positions.
Example For Traditional Leverage:
For a position of 26 lots with a leverage of 1:200, the required margin is calculated as follows:
Margin Required Formula:
Required Margin=Number of Lots × Contract Size × Market PriceLeverage\text{Required Margin} = \frac{\text{Number of Lots} \times \text{Contract Size} \times \text{Market Price}}{\text{Leverage}}Required Margin = LeverageNumber of Lots × Contract Size × Market Price
Given:
Number of Lots: 26
Contract Size: 100,000 (for standard lot)
Market Price: 1.1022
Leverage: 200
Calculation:
Required Margin= 26 × 100,000 × 1.1022 / 200 = 14,328
So, if your account balance is $30,000, the required margin of $14,328 represents 47.76% of your account balance.
It would cost you $14,328 to open 26 Lots
Dynamic Leverage
Traditional leverage typically follows a fixed pattern, allowing you to use a constant leverage ratio regardless of the size of your trades. This can sometimes restrict your ability to open additional positions.
Example For Traditional Leverage:
For a position of 26 lots with a leverage of 1:200, the required margin is calculated using the following formula:
Margin Required Formula:
Required Margin=Number of Lots × Contract Size × Market PriceLeverage\text{Required Margin} = \frac{\text{Number of Lots} \times \text{Contract Size} \times \text{Market Price}}{\text{Leverage}}Required Margin=LeverageNumber of Lots × Contract Size × Market Price
Given:
Number of Lots: 26
Contract Size: 100,000 (for standard lot)
Market Price: 1.1022
Leverage: 200
Calculation:
Required Margin=26 × 100,000 × 1.1022200=14,328 \ text{Required Margin} = \frac{26 \times 100,000 \times 1.1022}{200} = 14,328Required Margin=20026 × 100,000 × 1.1022 = 14,328
Required Margin= 26 × 100,000 × 1.1022 / 200 = 14,328
Thus, if your account balance is $30,000, the required margin of $14,328 represents 47.76% of your account.
It would cost you $14,328 to open 26 lots
MultiLP offers dynamic leverage, which adjusts automatically based on your trading volumes, allowing you to maximize your trading potential. Unlike traditional leverage, dynamic leverage is applied differently across various financial instruments.
Example
To understand the difference, let's compare the required margin for opening 26 standard lots of the EUR/USD pair using dynamic leverage versus traditional leverage of 1:200. Given that the market price of EUR/USD is 1.1022 (where one standard contract equals 100,000 units), dynamic leverage adapts to the trading volume, potentially lowering the required margin compared to a fixed leverage scenario.
