Leverage explained: why more isn't better

@founder · Sep 19, 08:02 AM

Leverage lets you open a position larger than your deposit. With 30:1 leverage, 1,000 euros of margin can control a position worth 30,000 euros. In the EU, 30:1 is the cap for retail clients on major currency pairs. The key point: leverage does not change the risk per trade, your stop loss and position size do. But high leverage makes it very easy to open an oversized position by accident, and that is what blows accounts. A sensible way to think about it: 1. Decide how much you're willing to lose (e.g. 1% of the account) 2. Place the stop where the trade idea is invalidated 3. Calculate the size from those two numbers 4. Only then check that the required margin is comfortable Most professionals use a small fraction of the leverage available to them. How much do you actually use? Note: educational content, not financial advice. Trading involves risk.