How The Leverage Can Hurt Me In Forex

How the leverage can hurt me in forex

Common Forex Leverage Amounts 


Leverage is generally offered in a fixed amount and expressed as a ratio.

How the leverage can hurt me in forex

Each broker offers leverage as per their internal as well as country-specific rules and regulations, so the amount can vary significantly depending on broker and country.

For example, US Citizens are allowed to take a maximum leverage of 50:1 for major & minor pairs and 20:1 for exotic pairs.

The Common leverage amounts (global) are typically 20:1, 50:1, 100:1, 200:1 and 400:1.

20:1 Leverage

Twenty to one leverage means you need $1 to place a trade order of $20.

50:1 Leverage

Fifty to one leverage signifies that for every $1 you have in your account you can open a trade worth $50.

As an example, if you deposit $200, you would be able to trade for an amount up to $10,000 on the forex market using 50:1 leverage.

It's not recommended to trading the full amount ($10,000) in any situation, but you would have the ability to trade up to that amount.

100:1 Leverage

A leverage of One hundred to one means that for every 1 unit of currency you have in your account, you can place a trade worth 100 units of currency. This is the most common leverage amount offered on a standard lot account.

For example, the typical $2000 minimum deposit for a standard lot account would provide you the power to control $200,000.

200:1 Leverage

Two hundred to one leverage signifies that for every 1 unit of currency you have in your account, you can open a trade worth 200 currency units.

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This is a common leverage amount offered on a mini and micro lot account.

For example, the typical $100 minimum deposit amount for a micro lot account would give you the facility to place trades up to the amount of $20,000 (2 mini lots or 20 micro lots).

400:1 Leverage

The leverage of Four hundred to one means that for every 1 currency unit you have in your account, you can open a trade worth 400 units of currency.

Though this is not very common, some brokers offer 400:1 leverage on mini or micro lot accounts.

For example, anyone depositing $200 into their forex account can place a trade up to $80,000 (we don't recommend it).

How the leverage can hurt me in forex