Home » Exposure

Exposure

« Back to Glossary Index

Last Updated on: 3rd February 2021, 01:09 pm

In trading, exposure is a general term that can mean three things:

  1. The total market value of your trades at open.
  2. The total amount of possible risk at any given point.
  3. The portion of your portfolio invested in a particular market or asset.

In stock trading, your exposure would be equal to the total amount you had spent on open positions.

For example, if you bought $500 of Apple, then the total amount you can lose on your trade is $500 if Apple’s stock price goes to zero.

Leveraged trading works differently. Your exposure can be amplified considerably beyond your initial outlay, known as your margin.

For example, some trades will only require a 10% margin. This means that you’ll be exposed 90% beyond the amount you deposit.

In these cases, profit can be multiplied but losses can exceed initial deposits.

Finally, market exposure can refer to the portion of a fund or portfolio that is invested in a particular sector or asset.

For example, a $100,000 portfolio that has $5000 invested in bitcoin would have 5% market exposure to bitcoin.

Related
Monetary Policy

Monetary policy refers to the actions taken by a nation’s central bank to influence the availability and cost of money and credit to Read more

Kathy Lien

Kathy Lien is an expert in global currencies, author, and Managing Director of BK Asset Management. For retail FX traders back Read more

European Parliament

The European Parliament is the European Union’s law-making body. It is directly elected by EU voters every 5 years. It is a Read more

Open Position

An active trade that has yet to be closed.

« Back to Glossary Index