What is leverage ?

POSTED BY radhevajrakaya ON November 11, 2012 11:21 pm COMMENTS (3)

What does “”leveraged his own capital on trades””  this line mean in stock market trading sense.

3 replies on this article “What is leverage ?”

  1. Dear Radhe, any more queries on ‘leverage’?

    thanks

    Ashal

    1. radhevajrakaya@gmail.com says:

      no sir. still searching.

  2. Let me give you an example .

    When you buy Rs 100 share by paying Rs 100 , its not leveraged

    When you buy Rs 100 share by paying 20 , its called margin trading ! .. Then its called leveraged . its like controlling a big asset by paying a small amount . Like when you buy a 50 lac house by paying 50 lacs , its a normal case

    BUt when you buy a 50 lacs house by paying 10 lacs downpayment and 40 lacs of loan , then its leveraged . any loss or profit you get is on 50 lacs, but you paid only 10 lacs , so always remember , a leveraged situation has high profit high loss possibility !

    Manish

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