ASX stands for Australian Securities Exchange, which is the primary exchange for Australian stocks based in Sydney. The ASX 200 is a benchmark index that was created in the year 2000 and consists of the 200 largest public companies by market capitalisation listed on the ASX.
Because of Australia’s recent rapid growth, and the relatively young age of its stock exchange and the associated ASX 200 index, there is a lot of potential for growth in this index and the companies that fall under it.
PrimeXBT is an award-winning online trading platform offering traders all the tools necessary to trade in the ASX 200 market. PrimeXBT prides itself on security, privacy, and a good overall user experience for its traders.
Margin trading on the ASX 200 means that the trader will use funds that are provided by PrimeXBT to open larger positions while only putting up a small part of the overall position. Essentially, margin trading improves trading results so that traders are able to realize larger profits on successful trades.
This can lead to potentially bigger profits as the position is bigger than the deposit put forward by the traders and they can see the amount leveraged by many multiples, but it is also risky as the losses for a trade that goes the other way can also mean higher losses than expected.
For example, If a trader takes a long position of $2,000 on the ASX 200 and it rises by 10%, using 5x leverage the same rise becomes a 50% profit, or $1,000. A similar spot trade without leverage would result in only 10% profit, or $200.
Disclaimer: Margin trading also comes with inherent risks if the position moves against the trade. You should never utilize 100% leverage and never invest more than you can afford to lose.