Leverage & Margin Requirements

Margin

Margin is the good faith deposit or the amount you have to put as collateral, to cover all credit risks that may arise during trading. Keep in mind that margin is not a transaction cost or a fee that you have to pay as a trader. Margin is a small amount of the account equity that you have to keep aside, which gets used as margin deposit. Margin requirements keep changing according to the trade size. The larger the trade size, the greater the margin requirement. You will always see margin as a percentage of the trade size. For example, if the trade size is $500,000, and the margin is 1%, the margin requirement is $5,000.


Leverage

Leverage allows you to manage trade sizes that are greater than the amount you possess in the trading account with Cabana Capital. You can use leverage to your advantage and larger returns, provided you use it properly. The amount of leverage for different trade sizes will always be in a ration such as 50:1, 500:1, and 1000:1.