Glossary
Leverage
Trading
Leverage lets a trader control a position larger than their account balance, expressed as a ratio such as 1:30 or 1:500.
At 1:30 leverage, $1,000 of margin controls a $30,000 position. Leverage multiplies both gains and losses in the same proportion, so it raises the probability of hitting a margin call, not the expected return.
Regulators cap retail leverage: ESMA and the FCA limit major FX pairs to 1:30 and cryptocurrencies to 1:2, while offshore jurisdictions allow far higher. Professional risk management usually caps risk per trade at 1-2% of equity regardless of the leverage the broker offers.