What is leverage?
Leverage is the ability of a trader to control a position in the market of a larger value compared to their invested capital. Please note that depending on the instrument traded, some pairs have a fixed leverage/margin requirement that is not affected by the general leverage applied to the client’s account.
For example, a leverage of 1:500 means that for every $1 you have in your trading account, you can have a $500 exposure in the market, whereas a leverage of 1:30 means that for every $1 you have in your account you could have a $30 exposure in the market.
By utilizing a higher leverage, the required margin to open a trade decreases accordingly.
Caution is advised, because leverage can be a double-edged sword – whilst it decreases the required margin and magnifies profits, it equally magnifies losses as well.
Looking to test the effect of leverage on the required margin?
Check our Margin Calculator here .