Short answer: Because their regulators allow it, and high leverage attracts clients. UK, EU and Australian rules cap retail leverage at 1:30 on major currency pairs to limit losses. Offshore regulators mostly don’t set caps, so brokers compete on leverage instead.
Where the 1:30 cap came from
Regulators in the EU (2018), the UK (2019) and Australia (2021) capped retail leverage after finding most CFD clients lost money, often fast. Their data showed losses fell sharply once leverage was capped.
What 1:500 actually changes
Not your profit per pip. A one-lot EUR/USD trade earns or loses $10 a pip at any leverage. What changes is how little margin it ties up: $217 at 1:500 instead of $3,617 at 1:30. That makes it easy to open far bigger positions than your account can survive.
| Account: $1,000 | At 1:30 | At 1:500 |
|---|---|---|
| Largest EUR/USD position | ~0.28 lots | ~4.6 lots |
| Pips against you to wipe out the account | ~360 | ~22 |
Who it can suit
Experienced traders sometimes use high leverage to keep less money with the broker while trading a sensible size. Used like that, it lowers counterparty risk. Used to open bigger trades, it mostly speeds up losses.
Compare leverage and protection by region on our brokers by country page.
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.
