What is Leverage?

Stock Market Terms explained as simple as possible

QUICK ANSWER

Leverage is the increased buying power that you get with a margin account.

Buying power means that you can buy more shares effectively put into your margin account. Let’s say you open a margin account and deposit $3,000 in it. The broker may give you a leverage of 6:1, which means you can now buy shares with a buying power of $18,000 (or 6 * $3,000).

Do you want to be a successful stock trader?

Discover our FREE and SIMPLE stock trading guide!
Get Started