How Could Profit Be Made with Leverage at UTO Capital?

This is a hypothetical example and does not represent actual performance or guaranteed results.

Risk Warning: Trading foreign exchange (FX) and contracts for difference (CFDs) carries a high level of risk and may not be suitable for all investors. Leveraged trading can amplify gains but also increases the risk of significant losses. You may lose more than your initial deposit. Always ensure you fully understand the risks involved. Past performance is not indicative of future results.

To help you understand how leverage can affect your position size and potential outcomes, below is a purely illustrative scenario. This example is not financial advice and is provided for educational purposes only.

Hypothetical Example (Sell GBP/USD Position)

Let’s assume your account balance is $3,000, and you decide to sell 0.10 lots (where each pip = $1) of GBP/USD at a market price of 1.8000, expecting the price to drop. You place a stop loss at 1.8300 (a risk of 300 pips or $300), which equals 10% of your account. The trade is closed 12 days later at 1.7450, giving a gain of 550 pips — i.e., a hypothetical profit of $550.

Now let’s see how different leverage ratios affect your required margin and buying power in this hypothetical setup.

1:200 Leverage

• Buying Power: $600,000
• Required Margin: ~£90 (for 0.10 lot GBP/USD)
• Risk Exposure: 10% of your account = $300
• Hypothetical Outcome: $550 profit if trade moves 550 pips in your favor.

1:100 Leverage

• Buying Power: $300,000
• Required Margin: ~£180
• Risk Exposure: 10% of your account = $300
• Hypothetical Outcome: $550 profit for 550 favorable pips.

1:10 Leverage

• Buying Power: $30,000
• Required Margin: ~£1,800
• Risk Exposure: 10% of your account = $300
• Hypothetical Outcome: $550 profit for 550 favorable pips.

Important Notes:

• Margin amounts shown here are approximations and may vary depending on market conditions, currency conversion rates, and broker policies.
• This scenario simplifies complex elements of trading (e.g., slippage, spreads, interest rollover, volatility) and should not be used to predict or expect outcomes.
• Leverage can multiply both profits and losses. Lower leverage generally reduces risk, but it also limits your potential exposure.

Disclosure:

This example is entirely hypothetical and intended for educational purposes only. It does not guarantee any specific result and should not be interpreted as investment advice or a promise of profitability.

UTO Capital is licensed and regulated by the Financial Services Commission of Mauritius.