Stock broker leverage

Online stock brokerages will usually offer leveraged trading on stocks CFDs. Leverage basically enables you to enter a position larger than your account would be capable of opening without it. Whilst this can seem like an attractive proposition, trading leveraged stocks also increases risk. E.g. If your stock broker account has $5,000 of equity available and 1:5 leverage, you would be able to take a position size of $25,000 (5,000 x 5 = 25,000). You should opt for a leverage that you feel comfortable with as each stock trader will have a different risk appetite.