When you trade CFDs, you can use financial leverage to increase your potential profits. leverage meaning you can trade with a larger amount of capital than you have in your account.
Three ways to use leverage in CFDs:
- Use a higher leverage ratio to increase your potential profits.
If you’re looking for a way to amplify your profits while trading CFDs, then using leverage may be the right move for you. Using a higher leverage ratio can increase your potential profits on each trade.
- Use a lower leverage ratio to reduce your risk.
If you’re concerned about the risks associated with high leverage ratios, you can use a lower one to help manage those risks. If your strategy is sound and reliable, using less leverage will still allow you to turn even small price movements into sizable profits when trading CFDs.
- Use leverage to increase your position size.
If you want to make a larger trade, but don’t have enough capital in your account to do so, then using leverage can help. By borrowing money from your broker, you can increase the size of your position and potentially earn more profits on that trade.
In conclusion, there are several ways to use financial leverage when trading CFDs. It’s important to understand the risks and benefits associated with each one so that you can make sound, informed decisions about your trading strategy.