Risk & safety

Leverage and margin: understand the exposure

Leverage lets you open a position larger than the money in your account. It magnifies profits and losses equally, which is why most retail clients of regulated brokers lose money trading CFDs.

Guide · 9 min read Updated 3 Nov 2026 Reviewed by the research desk

How leverage and margin relate

Margin is the deposit a broker holds to keep a position open. Leverage is the ratio between the position size and that margin. At 1:30, you need 1/30 of the position value, about 3.33%, as margin.

Worked example

Buying one standard lot of EUR/USD at 1.1000 is a position worth $110,000. At 1:30 leverage, the margin required is about $3,667. A move of 1% against you, about 110 pips, is a loss of $1,100, or 30% of that margin.

Leverage

Margin for $110,000

Loss on a 1% move, as share of margin

1:10

$11,000

10%

1:30

$3,667

30%

1:100

$1,100

100%

1:500

$220

500%

Margin calculator

See how much margin a trade ties up at different leverage levels, for a US dollar account.

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Margin required

$3,666.67

100,000 units

Profit and loss calculator

Work out the result of a trade in US dollars from its entry and exit prices.

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Profit or loss

$500.00

50.0 pips before spread, commission and swaps

Margin calls and stop-outs

Your margin level is your equity divided by the margin in use. When it falls to the broker's margin call level, you are warned. When it falls further, to the stop-out level, the broker starts closing your positions. Under EU, UK and Australian retail rules, brokers must close positions once your margin level reaches 50%.

Retail leverage limits

Regulators in the UK (FCA), the EU (ESMA, applied by regulators such as CySEC) and Australia (ASIC) cap leverage for retail clients and require negative balance protection, so you cannot lose more than your account balance.

Instrument

Maximum retail leverage (FCA, ESMA, ASIC)

Major currency pairs

1:30

Minor pairs, gold, major indices

1:20

Other commodities, minor indices

1:10

Individual shares

1:5

Cryptocurrencies

1:2

Offshore entities of the same brokers often offer 1:500 or more, without the same protections. Higher leverage is a reason to check the legal entity, not a feature to choose a broker by.

Before you trade with leverage

✓Calculate the margin and the loss on a 1% move for your position size.

✓Know your broker's margin call and stop-out levels.

✓Confirm negative balance protection applies to your entity.

✓Use a stop-loss and size positions so a single loss is a small share of your account.

Related reading: UK forex leverage limits, currency pairs and order types.

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Written by the Forex Awards research desk

Guides are checked against current broker documents and regulator rules. Spotted something out of date? Tell us and we will re-check it.