What Is Leverage in Forex?
Leer en español →Leverage lets you control a large position with a small amount of money. It can multiply profits — and losses — so understanding it is essential.
Leverage in plain English
Leverage is expressed as a ratio such as 1:100. With 1:100 leverage, $100 controls a $10,000 position. The deposit the broker sets aside to open that position is called margin.
A simple example
Say EUR/USD moves 1%. Without leverage, $1,000 would earn about $10. With 1:100 leverage controlling $100,000, that same 1% move is worth about $1,000 — but a 1% move against you costs $1,000 too. Leverage cuts both ways.
1:100 leverage → $200 margin controls a $20,000 position. A 0.5% favourable move ≈ +$100. A 0.5% adverse move ≈ −$100.
Leverage vs margin
Leverage is the ratio; margin is the cash held to keep the trade open. If losses eat into your margin, you may get a margin call or an automatic stop-out to protect your account.
How to use leverage responsibly
- Use lower leverage while you're learning.
- Always set a stop-loss.
- Risk a small, fixed % of your balance per trade.
- Remember: higher leverage = larger position = faster losses if wrong.
At Aion Trade, leverage goes up to 1:2000, but responsible traders size positions by risk, not by the maximum leverage available.
Put this into practice
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Open Account ▶Educational content only. Not investment advice. High leverage increases both potential profit and potential loss.