Start simple: a deposit that borrows the rest
Leverage lets you control a big position with a small deposit. That deposit is your margin. The rest is borrowed from the broker.
If the market moves in your favor, gains are larger. If it goes the other way, losses grow fast. Simple idea, sharp edges. Respect it.
Common caps (and what “pro” really means)
Most retail traders are capped around 1:30 on major FX under EU/UK/AU-style rules. Indices are often lower. Crypto, much lower.
“Professional” clients can ask for more, sometimes up to 1:400. Sounds exciting. Here’s the catch: you may lose safety nets. Negative balance protection can go away. Margin policy can get stricter. If you don’t know exactly why you need higher leverage, you don’t.
What your platform is quietly tracking
- Used (required) margin: the deposit locked for open trades.
- Free margin: the buffer left. This is your oxygen.
- Margin level: equity ÷ used margin × 100%. When this number shrinks, alarms start to ring.
The blunt rule that saves more traders than anything
Risk a small, fixed slice per idea. Many traders pick 0.5%–1% of equity per trade. Not 5%. Not “I’ll make it back.” Small cuts heal. Big cuts don’t.
You’ll get bored before you blow up. That’s the point.
Position sizing you can do in your head
1 pip value × stop (in pips) × lots ≈ money at risk.
Set the money at risk first (say 1% of the account). Solve for lots. If the lot size looks tiny, that’s your sign the move is too wide for your account. Pick a tighter trade or wait.
Leverage doesn’t pick direction. It only turns the volume up.
Traders often blame leverage when they meant to blame randomness. Leverage multiplies whatever you’re doing. If your entries and exits are random, leverage will make the randomness louder. That’s not a tool problem. It’s a plan problem.
Retail examples (so you can picture it)
| Scenario | Setup | What happens |
|---|---|---|
| Conservative | $5,000 account, 1:30, risk 1% ($50), stop 25 pips → small lot | Stop hit? Lose ~$50. You’ll be fine. Ten losers in a row? Annoying, not fatal. |
| Over-sized | $1,000 account, 1:30, tries to “make it back” with large lot | Small move against you eats free margin. A bigger candle, and you’re staring at stop-out. |
| “Pro” leverage | $10,000 account, 1:200, no clear plan | It works until it doesn’t. The one time you hesitate, the system won’t. It will close for you. |
How to read the fine print (without needing coffee)
- Margin call level: 50%? 80%? Higher warning gives you time. Lower warning means the first “alert” might be the close.
- Stop-out level: Where exactly do positions get closed? Is it per-position or by worst-first?
- Weekend gaps & news: Some brokers increase margin before events. You don’t want to learn that mid-CPI candle.
- Negative balance protection: If it isn’t there, ask yourself why you’re still there.
Three guards that keep you sane
- Pre-set your max risk per trade. Hard rule. No “just this once.”
- Use a stop you’ll actually keep. Don’t move it just because it looks close.
- Limit the number of live trades. Five tiny risks can act like one big risk if they all move together.
Mini calculator (fast checks, not a promise)
This is a rough guide. Real pip values vary by pair and quote currency.
Why we keep repeating “small”
Because you’ll trade again tomorrow. And the day after. Your job isn’t to win today. Your job is to be here next month with a clear head and a funded account.
Closing thought you can pin above your desk
Leverage is like a microphone. If you whisper smart things, people hear them. If you yell nonsense, they hear that too. Turn the volume down until your plan is worth amplifying.
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