What is trading 212 leverage?

Simply put, Trading 212 leverage allows you to purchase more units of a particular financial instrument than your initial deposit or available funds allow. Also, it can be calculated by the number of times the initial deposit or available funds can be multiplied for a particular instrument. Each instrument has a different ratio for leveraging.

What is leverage trading?

Leveraged trading is a strategy that allows investors gain larger potential returns without having the full amount of equity. Trading 212 allows leverage trading only on CFD trading. However, you cannot trade other complex instruments, such as options on Trading 212. Though leverage can magnify your profits, it can also result in larger losses.

What is an operating leverage ratio?

An operating leverage ratio refers to the percentage or ratio of fixed costs to variable costs. A company that has high operating leverage bears a large proportion of fixed costs in its operations and is a capital intensive firm. Small changes in sales volume would result in a large change in earnings and return on investment.

What does a high financial leverage ratio mean?

If a company's financial leverage ratio is excessive, it means they're allocating most of its cash flow to paying off debts and is more prone to defaulting on loans. A lower financial leverage ratio is usually a mark of a financially responsible business with a steady revenue stream.