Forex Glossary · Risk

What is Leverage?

Definition

A multiplier on your deposit that lets you control a position larger than your capital — 1:30 means $30 of position per $1 of margin.

Also called:margin trading

Leverage in forex is the broker's loan that lets you trade positions larger than your deposit. At 1:30 leverage, $1 of margin supports $30 of position size. At 1:100, $1 supports $100. At 1:500, $1 supports $500.

Leverage does NOT change the P&L of the position. A 100-pip move on one EURUSD lot is $1,000 of profit (or loss), regardless of whether you used 1:30 or 1:1000 leverage. What changes is the margin requirement — and how quickly a stop-loss converts to liquidation.

Regulator caps: EU (CySEC, FCA) and Australia (ASIC) cap retail leverage at 1:30 on majors, 1:20 on minors, 1:2 on crypto. US (CFTC + NFA) caps at 1:50. Singapore (MAS) at 1:20. Japan (JFSA) at 1:25. Offshore (FSA Seychelles, FSC Mauritius, VFSC) goes up to 1:1000.

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Leverage explained — full guide Brokers by regulator

More Risk terms

Drawdown

The peak-to-trough decline in an account's equity, usually expressed as a percentage of the peak.

Stop Loss

An automatic order that closes a position at a pre-set price to cap loss — the foundational risk-management tool.

Take Profit

An automatic order that closes a position at a pre-set profit level — locks in gains without monitoring.

Margin Call

A broker alert (or forced closure) when your account equity falls below the margin required to maintain open positions.

What is Leverage?

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