I am an absolute beginner and I have yet to make a single trade, so bear with me (pun not intended).
Short selling seems a lot easier than picking a stock. Especially in this market. There are companies that are screwed right now, I know they’re screwed and that isn’t changing.
Bed Bath and Beyond (BBBY), Aston Martin (GBX) and Norweigan Air Shuttle (ASA) are three of them. I don’t see some of sort of influx of customers or investors. They also have a consistent string of consecutive red days.
My question is, how do I use insane leverage on these companies to short them? I believe IC Markets offers 1:500 leverage.
Am I right in thinking leverage can be described as a multiplier? And 1:500 leverage means all market moves are amplified x500?
Let’s say a stock is worth $10, I buy 1 stock for $10 with no leverage (1:1?)
Does this mean if the stock hits $11 my position is now worth $11 with a profit of $1?
Let’s say a stock is worth $10, I buy 1 stock for $10 but this time with with x500 leverage (1:500?)
Does this mean if the stock hits $11 my position is now worth $511 with a profit of $500?
Doesn’t this mean that if it’s obvious a stock is moving in a certain direction, and the overrall market is very bearish or bullish, the upsides of x500 position outweigh the risk of being margin called?
I can play with $1000. I’m prepared to loose every penny of it. If I put $1000 in a short position on a stock with 1:500 leverage, the market only has to move down a little for me to make serious money. Now, this also means the market only has to move up a hair for my position to be margin called (?) and closed at a large loss. But I’m not emotionally invested in this $1000, I don’t mind loosing that $1000. And there are stocks persistently red that I’ve identified, a stock only needs to be red for a few days for me to make a lot of profit.
Is this possible? Are there brokers that let you short a position with 500x leverage? I know there are laws and regulations to prevent this kind of degenerate gambling?
I’m trying to experiment with CTrader, connected to my IC Markets account. It’s weird. When you create an account, that’s when you set leverage. It’s odd, I would have thought you could set leverage on individual trades, but it seems like an account-wide thing. Is this a standard practise? So you have high risk high reward accounts and low risk low reward accounts rather than positions?
There is a leverage section on the Symbol tab in Ctrader, but what’s weird is it can’t be changed.
What’s also weird is it’s different to the account-wide leverage.(My account has a leverage of 1.30, not 1.5, where does this 1.5 come from?)
Does anyone have an explanation? I’m already doing something degenerate so I actually want to know how to use cTrader properly to do this.