For a trader who wants to trade in share market, it is necessary to have a demat and trading account. He also needs to fund the amount with certain amount which is called margin money. This amount may vary from broker to broker and service to service. For an intraday trader it is necessary to find the broker who can help to have more leverage on the margin money so that he can have more trades every day. Therefore one needs to check for the high leverage stock brokers in the market. As there is no standard practice in the market the leverage is decided by the companies and broking firms.
What is leverage?
While going for the high leverage stock brokers one needs to know what the leverage means. Every trader has to offer certain margin money to the broker in lieu of which he is provided with certain credit limit. Usually one can find this limit as ten times of the margin money but in some cases one can also have it twenty times. It is the leverage only with the help of which the trader can have more value of trading than his margin money. Hence the simple logic here is if one gets the exposure maximum he can have maximum trades which can help him fetch more profit on daily basis. With the leverage amount one can go to more value of trading which may not be possible otherwise.
How is it beneficial?
For the low amount of margin the trader may not have that much exposure which can be improved only if he can have the services of high leverage stock brokers who offer more credit. In case of 10000 margin money usually one can trade up to the share value of 100000 as the broker offers 10 times leverage. If the broker offers 20 times he can trade up to the value of 200000 of shares. hence he can have more trades which can lead to more profit. There are certain brokers who are known for generous leverage to the traders.
Hence the traders who do not want to keep much amount invested can also go for high volume of trades. However, for the company as well as the trader much high exposure is also not considered as feasible. In case of a wrong trade in the bulk, the trader may have to bear massive loss and the company or borker may also have to run behind him to get the lost money if he has used the amount more than his margin money. Many traders use this facility prudently and hence for them high exposure or leverage can be more beneficial in long as well as short run. The decision of offering the exposure or leverage is taken by the broker or the company and one has to follow the same as a client. The trader who wants more leverage needs to discuss the same with the broker or company in the initial stage only.
