November 11, 2012 11:21 pm
What does “”leveraged his own capital on trades”” this line mean in stock market trading sense.
Dear Radhe, any more queries on ‘leverage’?
no sir. still searching.
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 !
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