Leverage is provided by Trade12 in order for the traders to elevate their market exposure, enabling them to open positions that exceed their initial investment.
The maximum leverage that an investor can get by trading with Trade12 is up to 1:400. However, before trading with a leverage, a trader must first consider all the possible risks involved while trading with a high leverage ratio.
Margin is a collateral that is deposited by the trader or investor in order for him to keep the positions open. It is a small percentage taken from the equity of the investor's trading account.
Note: It is important that the trader fully understands that trading on a margin to leverage his investments can amplify his losses just as it can with his profits.
Margin Call and Stop Outs
Margin Calls and Stop Outs are part of the Risk Management strategies of Trade12 and was implemented to limit further losses and to reduce the risk of a negative account balance.
When an investor trades in a leverage, the investor borrows a certain amount of money from the broker in order to trade at a level that is higher than his initial investment.
Margin Call is the first warning that is sent to the investor to inform him that his margin account value is falling below a certain percentage level (set by the broker) and that there is not enough balance to support the investor's current open positions any longer. The investor will either be requested to deposit more money to his account or close some of his open positions and sell off some of his assets in order to meet the minimum margin level.
Stop Out occurs when the equity in the margin account falls below the stop-out level set by Trade12, which closes down all of the investor's open trades to reduce the risk of a negative account balance.
CFD and/or Forex trading carry a high risk of loss and is not suited for everyone. All investors must inform themselves of possible losses involved and sought for independent advice if need be. Please read Trade12's Declaration of Risk statement.