Short answer: Leverage lets you control a position bigger than your deposit. Margin is the part of your money the broker sets aside to hold it. At 1:30 leverage, a $30,000 position needs $1,000 of margin. Leverage doesn’t change how much you win or lose per pip, only how big a position your money can open.
The maths
| Leverage | Margin needed for a $30,000 position | Margin as % |
|---|---|---|
| 1:30 | $1,000 | 3.33% |
| 1:100 | $300 | 1% |
| 1:500 | $60 | 0.2% |
The profit or loss on that $30,000 position is the same at every leverage level. A 1% move is $300 either way. What changes is how much of your account is tied up, and how close you are to a margin call.
Retail leverage caps
| Market | UK and EU retail | Australia retail |
|---|---|---|
| Major currency pairs | 1:30 | 1:30 |
| Other currency pairs, gold, major indices | 1:20 | 1:20 |
| Other commodities, minor indices | 1:10 | 1:15 |
| Individual shares | 1:5 | 1:10 |
| Crypto | 1:2 | 1:2 |
Offshore entities often allow 1:500 or more. See why offshore brokers offer 1:500.
Free margin and margin level
- Used margin is what’s set aside for open trades.
- Free margin is what’s left to absorb losses or open new trades.
- Margin level is your equity divided by used margin. If it falls too low, the broker starts closing positions. See margin calls and stop-outs.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
