Translated by Clara Araujo da Costa
Have you ever heard of financial leverage and guarantee margin? It’s important to know the difference between them and be aware of how they can impact your operations:
This resource, which brokerage houses offer to their clients mainly in Day Trade, is used in order for traders to be able to trade in higher values in the stock market than the value that they have at that moment.
In summary, it is as if the brokerage house is lending you this money in order to boost your capital, allowing you to trade in a much higher value than you have in patrimony and thus generating higher gains.
This is a value that the brokerage house will demand as security to allow financial leverage.
The amount may vary depending on the brokerage house, therefore it’s necessary to confirm the leverage policy and which margins are required for the BM&F and Bovespa markets.
Thus, the Trade Margin allows traders to operate with leverage because the margin is what determines the leverage made available by the brokerage house.
Therefore, the bigger your guarantee margin, the higher will be the financial leverage degree allowed by your brokerage house.
Managing margins and using financial leverage wisely are differential aspects to achieve consistency in your operations.
Would you like to know more about these subjects? We suggest the video below (content in Brazilian Portuguese):
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