Leverage is a powerful tool in trading that allows you to open larger positions with a smaller initial investment by borrowing funds from a broker. Essentially, it multiplies your market exposure, increasing both potential profits and potential risks.
How Does Leverage Work?
Leverage is expressed as a ratio, such as 1:10, 1:100, or 1:500. This means that for every $1 of your capital, you can control $10, $100, or $500 in the market, respectively.
For example:
🔹With 1:10 leverage, a $1,000 deposit allows you to control a $10,000 trade.
🔹With 1:500 leverage, the same $1,000 deposit gives you access to a $500,000 position.
Leverage can also be represented as a percentage:
🔹1:500 leverage = 0.2% margin requirement (you need only 0.2% of the total trade value).
🔹1:20 leverage = 5% margin requirement (you must cover 5% of the trade size).
Leverage at Eurotrader
At Eurotrader, we offer flexible leverage options to suit different trading needs:
- Up to 1:500 leverage for most global clients, providing high market exposure with low capital requirements.
- 1:30 leverage for European retail traders, in compliance with regulations. However, professional clients can apply to increase their leverage up to 1:500.
Managing Risk with Leverage
While leverage enhances trading opportunities, it also magnifies losses. That’s why risk management strategies — such as stop-loss orders and proper position sizing — are essential to protect your capital.
Start trading with Eurotrader today and take advantage of our competitive leverage options.
