Finance traders are always looking for new ways to improve their trading strategies. One of the most powerful tools they have at their disposal is leverage. Leverage allows traders to buy more stocks than they would be able to otherwise, using borrowed money from a broker.
Many different types of leverage are available, but all fall into two general categories: long and short. This blog post will cover what each type of leverage meaning depicts, and how it can help your trading strategy!
– Leverage allows traders to buy more stocks than they would be able to otherwise, using borrowed money from a broker.
– The benefit of leverage is that the trader can obtain a significant amount of stock for little money down.
– For instance, if one were to buy $100 worth of stocks with no margin, they would only be able to purchase around five shares at their broker’s going rate.
However, if they used 50% borrowed funds from a broker, they could instead purchase ten times this number – fifty total – which provides a much larger overall profit potential on each trade.
The Bottom Line
A symbol may appear next to specific securities in your account that indicates its eligibility for options trading and futures trading (and forex). These symbols are called “Penny Pilot Symbols.” Penny symbols indicate instruments eligible for non-margin trading.