Account

New to ADSS? Open an
account now to get started.

OR

Already have an account?

Add funds to your ADSS account

Account

New to ADSS? Open an
account now to get started.

Add funds to your ADSS account

Trends & Analysis
News

Crude oil dips for 3rd session after supply data

News

Is there an AI upside for AMD?

News

GBP/USD recovers following wage report

News

Buy the JPMorgan dip?

News

Goldman Sachs shares surge after earnings beat

News

Keep an eye on these key S&P 500 levels

Trends & Analysis
News

Crude oil dips for 3rd session after supply data

News

Is there an AI upside for AMD?

News

GBP/USD recovers following wage report

News

Buy the JPMorgan dip?

News

Goldman Sachs shares surge after earnings beat

News

Keep an eye on these key S&P 500 levels

Leverage definition

Leverage is an investment strategy that uses borrowed funds to gain exposure to larger trading positions. Leveraged trading is also known as margin trading. The aim of using leverage in trading is to increase the exposure of a trading position to increase potential returns from a trade. However, leverage also magnifies the potential risk should the markets go against a trader’s predictions. Leverage can be used across a variety of financial instruments and markets, such as indices, stocks, commodities, forex, and Exchange-Traded Funds (ETFs), to name a few.

 

Leverage can be used by both companies and individual investors. Retail investors use leverage to increase potential returns from their investments. Companies can also use leverage to finance their assets. Instead of issuing stock to raise funds for operations, companies can instead use debt financing to fund their business operations.

 

When trading using leverage, a provider will only ask investors for a fraction of the total value of their position. The rest will be lent by the provider instead. Nevertheless, any profit and losses will depend on the total size of your position, which is why losses may end up exceeding your initial deposit.

 

Advantages of leverage

Leverage is used primarily to amplify potential profits. Additionally, using leverage allows traders to control a larger amount of capital than they would otherwise have access to with their available funds. Leverage can also be used in short-term low-risk situations. Instead of using additional capital, traders can execute trades at opportune moments with the intention of existing their leveraged position quickly.

 

Limitations of leverage

Leveraged trading generally carries more risk, as it involves traders opening bigger positions with greater exposure to the market. While traders may be able to make more substantial profits, they may also face more substantial losses if the markets go against their predictions.

 

Risk management for leverage

One popular risk-management tool when trading with leverage is a stop loss. By using a stop-loss order, it can help to limit potential losses if the market moves in an unfavourable direction. However, do note that basic stop losses are still susceptible to market slippage and gapping.

 

Start trading with ADSS

ADSS offers a range of global markets for traders, with CFD opportunities in indices, commodities, forex, equities and more. We also feature tutorials, how-to guides, and weekly webinars to help you navigate the financial markets and find better trading opportunities. You can start trading and investing online by opening a live trading or demo trading account.

 

See all glossary trading terms


Site by Pink Green
© ADSS 2024


Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.

ADS Securities LLC (“ADSS”) is authorised and regulated by the Securities and Commodities Authority (“SCA”) in the United Arab Emirates as a trading broker for Over the Counter (“OTC”) Derivatives contracts and foreign exchange spot markets. ADSS is a limited liability company incorporated under United Arab Emirates law. The company is registered with the Department of Economic Development of Abu Dhabi (No. 1190047) and has its principal place of business at 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.

The information presented is not directed at residents of any particular country outside the United Arab Emirates and is not intended for distribution to, or use by, any person in any country where the distribution or use is contrary to local law or regulation.

ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.