In trading leverage meaning is simply a facility that helps traders to get much exposure. There are leverage products and a good example being CFDs that help traders magnify their potentials. The potentials can be profits or even losses. Leverage is a very important feature in CFD trading. Leverage can also be a very powerful tool for any serious trader. Traders use it to take advantage of price movements. It can be used in making your capital go further.
How leverage works
When you are trading CFDs, you must first try to understand how leverage works. Leverage simply works by using a small deposit. The deposit is always known as the margin. This provides you with exposure to your assets. It is like putting down a small fraction of the total value of your assets or trade. The exposure compared to the margin is what is known as the leverage ratio. Understanding about leverage ratio is very important. It can be a great factor and feature that you will be considering every time that you trade. Take your time to understand it before you begin your trade. Doing some market research is very important before joining any type of trade.