Choosing appropriate leverage via CFDs

T

TKshadow

This is my first post so apologies if the formatting is incorrect or it is in the wrong place.

I'm looking to enter a couple of CFD positions.

The issue I have is the initial margin on most positions is 20% i.e. 5X leverage. Is there a way I can reduce the leverage, to say, 2X. I'd then look to scale if the position goes my way.

I appreciate this may be platform specific, I'm using SaxoBank.

Thanks.
 
100 (your capital) x 2 (your leverage) / 5 (CFD's leverage) = 40

You invest only 40% of your capital (20% on each of 2 positions).
 
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say33 said:
100 (your capital) x 2 (your leverage) / 5 (CFD's leverage) = 40

You invest only 40% of your capital (20% on each of 2 positions).
More...

Thanks. Just wanted to check a couple of things:

  1. As a further example If I want 2X leverage on a single CFD it would be (my capital) x (leverage desired) / (CFD leverage)
  2. How do you actually implement only risking the desired percentage of capital on the platform. For example, stock X = $60.00 Initial margin available = $1,000 (say). Let's say I wanted 4 CFDs then this is $240.00 notional value. Assuming a margin requirement of 20% this position would need $48.00 of margin, but then that's still 5X leverage. Perhaps, it's the platform I'm on, but I can't see any option where I can risk any less than that to lower it down to where I'd be 2X levered...
Obviously, I understand that you'd usually use leverage to get a notional position greater than your deposited margin, but for examples sake I went with the above.

Thanks.
 
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If the trade decision is flawed, leverage won't work. If the trade decision is solid aka good, with a little patient, one will be filthy rich even without leverage.
 
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