For those considering investing, it’s important to first understand a few key terms.
These allow you to appreciate how the markets and trading work, so you can form a strategy and make decisions that are beneficial to your long-term goals.
Forming part of this core terminology are two words: margin and leverage.
“Margin” is a way for investors to increase their buying power, which can be beneficial for those whose budgets are modest.
While it can increase profit, there’s also a greater degree of risk inherent in it.
Perhaps you’re also wondering “what does leverage mean in trading”? The two terms are often used interchangeably.
They both refer to ways to open a trading position with a broker using only a small amount of capital to take up a large position.
The use of these terms can be confusing for amateur investors and those who’ve yet to enter the markets.
However, with this guide, you should soon develop a much better understanding of them.