Leverage in forex, explained
Leverage lets you open a position larger than your deposit. It does not change how much a pip is worth, it only changes how much margin the broker holds. That is why it is easy to misuse.
Last reviewed: · 964FX
Leverage and margin with numbers
One standard lot of EUR/USD at 1.1000 is worth 110,000 dollars. At 1:30 leverage the broker holds about 3,667 dollars of margin; at 1:100 about 1,100 dollars; at 1:500 about 220 dollars.
In all three cases a 50-pip move is worth about 500 dollars. Higher leverage only lets you open the same risk with less money, which makes it easier to open too much.
Margin call and stop out
If losses reduce your equity close to the margin used, the platform warns you (margin call) and then starts closing positions automatically (stop out). The exact levels are in your broker's terms.
Retail leverage limits
In the European Union and the United Kingdom, regulators limit retail leverage to 30:1 on major currency pairs and 20:1 on gold and non-major pairs, and require negative balance protection. In the United States the limit is 50:1 on major currency pairs and 20:1 on other currency pairs. Brokers in other jurisdictions may offer more; higher leverage means a smaller move can wipe out the account.
Using leverage safely
- Decide the risk per trade first (for example 1% of the account), then size the position from the stop distance.
- Do not use all available margin; leave room for spreads and news spikes.
- Be extra careful around high-impact events in the economic calendar.
- Remember that IC states its leverage is dynamic and may change, which can affect margin on open positions.
Frequently asked questions
What is 1:100 leverage?
It means the broker holds 1% of the position value as margin. A 100,000 dollar position needs about 1,000 dollars of margin.
What leverage is best for beginners?
There is no best number, but lower is safer. Most important is the risk per trade, which comes from the stop distance and lot size, not from the leverage setting.
Can I lose more than my deposit?
In some cases, yes, if the market gaps. EU and UK retail clients have negative balance protection; elsewhere it depends on the broker's terms.
Does leverage change the pip value?
No. Pip value depends on lot size. Leverage only changes the margin needed to open the position.
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Risk warning
Forex, gold and CFDs are leveraged products and you can lose money quickly. Only trade money you can afford to lose. This page is education, not financial, tax, legal or religious advice, and past results do not guarantee future results.
Introducing broker disclosure
964FX is run by Saif Altamimi, an Introducing Broker (IB) for IC Markets. The ic.com website is operated by Raw Trading Ltd, which IC states is regulated by the Seychelles Financial Services Authority (licence SD018). If you open an account through a link on this site, Saif may receive a commission from the broker. IC does not accept clients from some countries, including the United States, Canada and Iran, so check that the service is allowed where you live.