Margin explained: the five numbers on your accountBalance, equity, used margin, free margin and margin level. Every leveraged platform shows all five, most traders watch one of them, and the one most people watch is the one that tells you least.What is leverage in trading?
Leverage does not change what a trade wins or loses. It changes how large a trade you are allowed to open - a different thing, and the reason accounts disappear in an afternoon.
Every broker on this site advertises a leverage ratio, and 99 of the 100 records we hold carry one. A new trader reads the range as a scale from cautious to generous, picks something in the middle and never thinks about it again - which is exactly the wrong way round. The ratio is not a feature you consume. It is a ceiling on the size of the mistake you are permitted to make.
Those 99 records, sorted by the figure the broker publishes. The spread is not a difference of generosity; it is very largely a difference of jurisdiction.
- 36record 1:30 or lessAlmost all of them licensed retail entities in Australia, the UK, the EU or Singapore.
- 34record more than 1:500Predominantly offshore entities, where no regulator caps the figure.
- 11record more than 1:1000Topping out at 1:5000.
Counted from the maximum leverage each broker publishes, at the date each record was last checked.
What leverage actually is
When you open a position you are not buying currency. You are entering a contract whose value moves with a market, and the broker is prepared to let you control a large contract while putting up only a fraction of its value. Leverage is the ratio between the two. At 1:30 a $30,000 position needs $1,000 behind it. At 1:500 the same position needs $60.
Notice what did not change. The position is $30,000 either way, so a one per cent move is $300 either way.
What a trade wins or loses is decided entirely by how big it is and how far the market moves. Leverage does not touch that.
What leverage decides is how large a position your balance permits. With $1,000 at 1:30 the largest position you can open is $30,000. With $1,000 at 1:500 it is $500,000. That is the whole of it, and it is where the danger lives.
Leverage and margin are one relationship, written two ways
A ratio and a percentage describing the same thing from opposite ends. Brokers use both, sometimes on the same page, which is most of why the two words get confused.
| Leverage | Margin required |
|---|---|
| 1:2 | 50% |
| 1:5 | 20% |
| 1:10 | 10% |
| 1:20 | 5% |
| 1:30 | 3.33% |
| 1:50 | 2% |
| 1:100 | 1% |
| 1:500 | 0.2% |
| 1:1000 | 0.1% |
Required margin = position value ÷ leverage. What that reserved capital then does inside your account is the subject of the next guide, on margin.
The arithmetic, done once
A $1,000 account trading EUR/USD, where one standard lot is 100,000 units and one pip is worth about $10 on that lot. This is the calculation that explains why the ratio matters at all.
Same account, two ceilings
- Account equity$1,000
- Maximum exposure at 1:500$1,000 × 500$500,000
- That is, in standard lots$500,000 ÷ 100,0005.0 lots
- Value of one pip at that size5 × $10$50
- Move needed to erase the account$1,000 ÷ $5020 pips
At 1:30, the same $1,000 permits 0.3 lots, roughly $3 a pip, and needsover 300 pipsTwenty pips on EUR/USD is an ordinary morning. Not a crash, not an event: an ordinary morning.
The capped trade is not better. You have simply been prevented from opening a position that could not survive normal conditions. Nothing stops a trader at 1:500 from opening a third of a lot and running exactly the same risk - and very few do, because the maximum is what the platform makes easy and the position-size box does not warn you. Deciding that number deliberately is position sizing, and it is the single most useful habit on this list.
Maximum leverage is not the leverage you are using
This is the distinction that makes broker comparison by headline ratio close to meaningless.
Maximum leverage
What the broker permits. A property of your account and the entity that opened it, set by that entity's regulator.
It appears on the homepage, in comparison tables and in advertising, because it is the number that sounds like generosity.
Effective leverage
What you are actually running: total market exposure divided by account equity. A property of your decisions.
$10,000 of equity holding $20,000 of positions is trading at 1:2, whatever the account permits. This is the figure that predicts whether an ordinary week hurts.
A trader with 1:1000 available and 1:2 in use has far less exposure than one on a 1:30 account trading near the ceiling.
The headline figure is probably not yours
Most brokers of any size are several companies. One brand may hold an Australian licence, a Cypriot one and a third in the Seychelles or Mauritius, and which of those legal entities opens your account is decided by where you live rather than by which you would prefer.
The retail cap follows the entity, so the figure on the homepage is frequently the highest one the group can offer anybody, anywhere. ACY Securities is the clearest case in our records because it writes both figures down: 1:30 for Australian retail clients, up to 1:5000 internationally. Same brand, same website, a difference of more than a hundredfold in what you will actually be offered.
Forty-six of the hundred records qualify their leverage figure with a word like retail, professional or international. The other fifty-four give one number. That number is not necessarily wrong, but it is not a promise about your account. Our country pages ask the same question from the other direction: which brokers hold a licence where you live.
What the major regulators cap retail leverage at
Limits on the firm rather than guidance to you. A broker cannot offer more to a retail client of the entity holding the licence, whatever its marketing says.
| Regulator | Retail cap on major currency pairs |
|---|---|
| ASIC (Australia) | 1:30 |
| FCA (United Kingdom) | 1:30 |
| CySEC, and the rest of the EU | 1:30 |
| MAS (Singapore) | 1:20 |
| CFTC and the NFA (United States) | 1:50 |
| CIRO (Canada) | Set per instrument by margin rules rather than one headline ratio |
Minor pairs, indices, commodities and single shares are capped lower again, typically from 1:20 down to 1:5 or 1:2. A headline ratio always refers to majors.
Why the high ratios cluster where they do
A four-figure ratio is only possible where no regulator forbids it, so a high ceiling and a weak supervisor tend to arrive together. That is a correlation rather than a rule - several competently run firms appear below - but it is why leverage is not scored as a positive anywhere in our ratings, and why the brokers at the top of most lists on this site are capped ones.
The brokers in our records advertising more than 1:1000, in rating order.
FXTMFSC (Mauritius)FSCA (South Africa)+11:30008.3/10
AlpariMISA (Comoros)1:30007.4/10
FBSFSC (Belize)1:30006.1/10
IUXFSC (Mauritius)FSCA (South Africa)1:30006.8/10
Scope MarketsFSC (Belize)FSC (Mauritius)+11:30006.9/10
InstaForexFSC (BVI)1:50007.5/10
The figure shown is the one the broker publishes. Which entity offers it to you depends on where you live.
Tiered leverage, and why your margin can change
Some brokers reduce the maximum as your exposure grows: 1:1000 on the first $50,000, 1:500 on the next slice, 1:200 above that. A broker advertising a four-figure ratio may therefore be offering it only on positions small enough that it barely matters.
Margin requirements can also move without your position changing at all. Brokers raise them around major economic announcements, elections, weekends, holidays and thin trading, which increases your used margin overnight and eats the buffer you were relying on. Running an account close to the minimum requirement is what turns that ordinary housekeeping into a problem.
Questions people ask about leverage
Is higher leverage better or worse?
Neither in itself - it is a ceiling rather than a setting. What makes it dangerous is that a high ceiling permits position sizes that cannot survive normal volatility.
In practice the high ratios cluster in the jurisdictions with the least recourse, so the number ends up being a rough proxy for something else worth knowing.
What does 1:100 leverage mean?
Every $1 of required margin can support $100 of market exposure, which is the same as a 1% margin requirement. A $100,000 position would need about $1,000 behind it.
Do I have to use all the leverage I am offered?
No, and almost nobody should. Leverage is a maximum rather than a requirement, and an account at 1:500 running a third of a standard lot is taking exactly the same risk as a capped account running the same position.
Why is the leverage I am offered lower than the website said?
Because you have been onboarded to a different legal entity from the one the headline figure refers to. Which entity takes your account is decided by your country of residence, and the retail cap follows that entity's licence.
Does leverage cost money?
Not as a separate fee. But a leveraged position held overnight normally incurs a financing or swap charge, and over months those can dwarf the spread you opened at.
Can a broker change my leverage after I have opened an account?
Yes. Margin requirements change with volatility, major events, position size and the broker's own risk rules, and the change applies to positions you already hold.
Ready to put this to work?
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Nothing here is financial advice. Leveraged products can lose more than they make.
Other relevant articles
Margin explained: the five numbers on your accountBalance, equity, used margin, free margin and margin level. Every leveraged platform shows all five, most traders watch one of them, and the one most people watch is the one that tells you least.
Position sizing: how to calculate trade sizeTwo traders take the same trade, at the same price, with the same stop. One loses 1% of their account and the other loses 10%. The only difference between them is a number they chose before entering.
Risk management: the whole accountSizing one trade correctly is arithmetic. Keeping an account alive across a hundred of them is a different job, and it is mostly about the losing streak you have not had yet.