Leverage Calculator
Category: Trading CalculatorsCalculate leverage, margin requirements, and position sizing based on your account balance and risk parameters
Leverage and Margin Results
Risk Analysis
Stop Loss Calculation
Account Allocation
Leverage Impact on Margin
Leverage Comparison
| Leverage | Required Margin | Max Position Size | Buying Power |
|---|
About Leverage and Margin
Leverage allows traders to control larger positions with a relatively small amount of capital. Understanding leverage and its implications is essential for effective risk management.
What is Leverage?
Leverage is the ratio of the position value to the required margin. For example, with 100:1 leverage, you can control a $100,000 position with just $1,000 of margin.
Required Margin
Required margin is the amount of capital you must have in your account to open and maintain a position. It's calculated as: Position Value ÷ Leverage.
Buying Power
Buying power is the total position value you can control with your account balance. It's calculated as: Account Balance × Leverage.
Risk Management
While leverage can amplify profits, it also increases risk. Always use stop-loss orders and risk only a small percentage of your account on any single trade.
Tips for Using Leverage Responsibly
- Start with lower leverage until you gain experience and confidence in your trading strategy.
- Always use stop-loss orders to limit potential losses.
- Consider reducing your leverage during volatile market conditions.
- Avoid using the maximum leverage available just because it's offered.
- Remember that higher leverage means higher risk and faster account depletion if trades go against you.
What this calculates
The ratio between your position size and the capital behind it.
- Formula
leverage = position value ÷ account equity- Worked example
- A 200,000 HKD position on a 20,000 HKD account is 10:1 leverage. A 1% move against you is a 10% hit to the account.
- When to use it
- To sanity-check exposure across all open positions, not just one.
- Common mistake
- Judging leverage by the broker’s maximum rather than what you are actually using. The limit is permission, not a target.