One of the most common reasons people decide not to trade stocks is that they believe they need huge amounts of money to even start trading this couldn’t be further from the truth. The truth is with many trading platforms online they allow people the ability to start trading with as little as 100 USD.
The Power of Leverage
You might then immediately think that 100 USD might not be enough money to make a decent return again that’s wrong!
Let me explain why, with trading platforms like XM and Plus 500 they allow investors to use leverage to magnify their position which means you can trade with the power of more than your initial deposit this is called leverage. Leverage can differ on trading platforms and asset classes but to use an example with leverage at 100:1 you get to borrow 100 for ever 1 dollar you invest. Therefore with a $100 investment with leverage of 100:1 you have the power of investing with $10,000 which can make a huge difference when trading.
If you invested in an asset without leverage with say a 5% return once the position was closed you would make $5 of the 100 dollar investment but if you used leverage with a ratio of 100:1 that 5% return would be $500 5 times the initial investment. This should shatter the belief that investing is out of your reach or you don’t think you could make enough return of your initial investment.
There is a danger using leverage however, your loss could actually exceed your initial deposit losing a higher amount then you started investing with because you are using debt to invest with so if you close your position with a 5% decline on a ratio of 100:1 you would have a $500 loss. However what if there was a way to prevent this from ever happening, well there is and its called a stop loss. What a stop loss does is it automatically sells your position when the asset your trading gets to a certain point so you can minimise your losses.
Start Trading with Leverage now
There are always multiple opportunities waiting to trade and with the use of leverage you are able to massively maximise your return, we recommend plus 500 and XM as they both have easy to use trading platforms offering leverage when investing. Click below to make an account and start using leverage to your advantage now. Start Trading.