MoneyTec Traders Community Forum - View Single Post - How do brokers pay your leverage? How does it work?

TraderABC · 18-12-2005, 18:15

Hello all. I have this question that I've couldn't find answer for:

What happens when you open leveraged (i.e. 1:100 ) position? Where do your broker find the money to shell out 99K for your 1K? Considering there maybe thousands of clients opening positions (and perhaps many lots at once), where do your brokers find the money of their own to put? Basic math can show that brokers may require to pay HEAVY sums of money. So, who pays your brokers? How are they protected? If you open a position, does that mean that there have to be 99 other people opening at the same price? Is that why slippage occurs (they get the closest bucket fill?)

Thank you.

18-12-2005, 18:15	#1
TraderABC level 3 Join Date: Jun 2005 Posts: 342 Downloads: 0 Uploads: 0 Rep Power: 4	How do brokers pay your leverage? How does it work? Hello all. I have this question that I've couldn't find answer for: What happens when you open leveraged (i.e. 1:100 ) position? Where do your broker find the money to shell out 99K for your 1K? Considering there maybe thousands of clients opening positions (and perhaps many lots at once), where do your brokers find the money of their own to put? Basic math can show that brokers may require to pay HEAVY sums of money. So, who pays your brokers? How are they protected? If you open a position, does that mean that there have to be 99 other people opening at the same price? Is that why slippage occurs (they get the closest bucket fill?) Thank you.