What is Leverage in Stock Trading? Difference between Leverage and Margin (Hindi)

Описание: What is Leverage in Stock Trading? Difference between Leverage and Margin is mostly not known to the investors and traders. The leverage and margin are loosely defined terms and used interchangeably.

As per experts, the definition of leverage is "When an investor or trader control a large amount of money by using very little of own money and borrowing the rest". It is useful in risk management. The margin is mentioned in percentage terms i.e. % whereas leverage is mentioned in the ratios.

In layman terms, if your stockbroker is providing you a margin of 5% then the leverage is 20:1 i.e. for every 1% movement in the stock price, your portfolio will show an impact of 20%. In the case of profit, it is good but the loss can wipe out your profit is secs. You can use leverage in stock trading for risk management i.e. before taking any trade, an investor or trader should calculate the impact of leverage i.e. for every % change in stock price, how much he/she will lose or gain.

Normally, the margin is defined in percentage by the stock brokers. Therefore, you should check the same with your broker and calculate leverage. It will help you in informed stock trading.

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