IC MARKETS LEVERAGE - EXPLANATION AND EXCLUSIVE TIPS
In the trading world, you may have heard the word “leverage” being used multiple times in many contexts. In general, leverage allows you to influence your environment in a way that magnifies your efforts without affecting your resources. When applied to the context of trading, leverage allows you to access a larger portion of the market using a smaller deposit in comparison to traditional investing. Thus, making a small up-front investment gives you the advantage of getting greater profits. However, this also means that you are exposed to higher losses as well.
- Minimum Deposit: 200$
- Maximum Leverage: 1:500 (T&C Apply)
- Tradable Assets: Forex, Indices, Commodities, Stocks, Bonds, Cryptos, Futures
- Regulated by FSA (Financial Services Authority), ASIC & CySec
- Demo Account: Yes
Note: Your capital is at risk
In the context of forex trading, using leverage essentially gives your account a boost. You can open orders as large as 1000 times greater than your capital. It is thus a way to access much larger volumes of trading compared to what you would normally be able to do. Leverage is one of the major reasons why a growing number of traders are moving into forex trading daily.
To understand what leverage is, we must first know what the margin is. Margin refers to the amount of money a broker requires you to commit to cover potential future losses on a trade. The leverage allowed in forex can be up to 500:1 and is an immense comparison to other markets. Inequities market, the leverage accounts generally allow you to borrow at a 2:1 ratio.
To calculate how much leverage one should use, he/she should look at the risk taken on a trade. For instance, let us assume you have a trading account with $5000 in funds, and your risk per trade is 2%. Also, let us say that the EUR/USD has been purchased by you at 1.1256 with a stop set at 1.1246, which is a 10 pip stop loss. Normally a trader would be required to enter one standard lot, or $100,000 to trade this position, which is 20 times more than what your trading account has. However, if you correctly size your position, you are merely risking only 2% of your account size when controlling a $100k position.
Now, if you wanted to risk 10% of your account, on the same above trade, i.e., $500, you would need five standard lot or $500,000 to trade with a 10 pip stop. In this case you are trading with a 100:1 leverage. In other words you are trading 100 times your account size by risking only ten percent of your whole account.
Forex lot size and leverage
Lots refer to a specific sum of funds a trader uses for their trade. In forex, they can come in three forms: standard lot,mini lot and microlot, which refer to 100,000, 10,000 and 1000 currency units respectively. For instance, a standard EUR/USD lot is 100,000 EUR and a microlot is 10000 EUR. Depending on the brokerage the trader is using, they can have their trade size as one standard fx lot size or 10 mini sized lots.
IC markets crypto leverage
When it comes to cryptocurrency trading, IC markets offers CFDs on them, that allow traders to go long or short without having to take ownership of the underlying cryptocurrency.Since IC markets is known as one of the brokers who offer some of the tightest spreads in the market, leverage on crypto-trading is 1:5.
IC markets oil leverage
IC markets offer an opportunity to trade some of the world’s most heavily traded commodities. This includes energy contracts which consist of natural gas, Brent and crude oil. The leverage for trading oil at IC Markets is 1:100.
IC markets gold leverage
Many traders consider gold as a preserver of wealth or as a hedge against the devaluation of a currency. Because of the fact that national governments employ expansionary policies as a result of exchange rates, the popularity of gold has increased more than the rise in its price. At IC Markets, goldcan be traded either directly against the US Dollar or Euro, or as a CFD. Leverage for trading gold as a currency pair is 1:400 while that of trading gold as a CFD is 1:100.
IC markets forex trading leverage
At IC Markets, traders can trade currency pairs with one of the highest execution speeds available in the industry. They allow a leverage of up to 1:500.
The maximum leverage offered by IC Markets across all its platforms is 1:500
A leverage of 1:500 allows a trade to receive $500 to trade with for every $1 of their capital.
To change the leverage applied to your account, you simply must navigate to your client area. From there, simply select your account number and your new preferred leverage. After that is done, submit the request and wait for approval.
When selecting which leverage to use, you should always take some factors into consideration. First of all, a leverage of 1:500 or 500:1 may seem exciting, but is an extremely high level of leverage in trading. Because of the risk such high leverage poses, it is not allowed legally in many jurisdictions. The markets of the United States, the European Union and Japan for example, restrict leverage offerings to 1:30 for retail clients. Because of the high risk involved, traders should be skilled and have enough experience, when dealing with high leverages. Additionally, the strategy you use and your overall trading style should be taken into consideration. Finally, it’scrucial that you determine all the conditions of a particular trade before opening a position, which also includes its duration. If you prefer opening and closing positions within a few hours, then a leverage of 1:100 or higher will work.
Many people have a common misconception about leverage being a form of loan from a broker. In reality, it is not, because derivatives are based on agreements. In the spot Forex market, currencies are traded in pairs. For instance, if one enters a long position on GBP/USD at $1.2000, he/she is essentially agreeing to purchase GBP and sell USD. Now let us say that GBP/USD trades at $1.2900 and a trader enters a long 100,000 GBP. When applied to the above conditions, this means that 100,000 GBP are to be received in exchange for 129,000 USD. Now if the pair trades at $1.3000, the trader liquidates his position. Now 100,000 GBP is now equal to 130,000 USD. This means there is a $1000 profit. Thus, currencies never change hands, and no loan is required from the broker’s end.
IC Markets provides one of the lowest spreads in the industry, combined with fast execution speeds. Its total offering includes over 285 products including precious metals, forex, stocks, futures, and others. It falls under the regulation of different regulatory authorities in the world, ensuring transparency and legitimacy. To ensure security, IC markets stores client funds in segregated client trust accounts atNational Australia Bank and Westpac Banking Corporation. IC Markets leverage availability ranges from 1:1 to 1:500.
For more please read IC Markets Review
Note: Your capital is at risk