TL;DR
Leverage trading allows investors to trade with amounts significantly larger than their actual capital through margin accounts. For example, to open a position worth 10,000 TL with a 50% margin, an investor must have at least 5,000 TL in collateral.
7 min readWhat is leveraged trading? Risks of VIOP and margin accounts, margin calls, and position sizing.
Leverage and Margin Trading
For detailed information, see our portfolio management guide. Consider alongside diversification and rebalancing strategies.
Application on BIST
Use our stock screener and portfolio simulator to apply this strategy on BIST. Measure risk-adjusted performance with the Sharpe ratio.
Test your portfolio in the simulator.
Go to Simulator →Related articles: Portfolio Management Guide, MPT, Diversification, Rebalancing.
Frequently Asked Questions
What is a margin account?
A margin account is a type of account where investors deposit collateral to facilitate trading on the stock market. These accounts allow for larger positions to be taken.
What are initial margin and maintenance margin?
Initial margin is the minimum amount required to open a position. Maintenance margin, on the other hand, is the additional collateral requested when market conditions worsen.
What is VIOP?
VIOP is a market in Turkey where derivative products are traded. Investors can speculate on future price movements through futures contracts or options.
How do leverage ratios work?
In VIOP, for example, with a 1:10 leverage ratio, it is possible to open a position worth 10,000 TL with a 1,000 TL collateral. High leverage increases potential profits but also comes with greater risks.
What are the advantages of using leverage?
Leverage allows investors to open larger positions with less capital. For instance, an investor can enter a 20,000 TL position with a 10,000 TL investment using 50% leverage, leading to a higher potential return.
This content does not constitute investment advice. Past performance is not a guarantee of future results. Make your investment decisions based on your own risk profile.
