for the maximum leverage available based on your account balance. Once your account balance exceeds the thresholds shown, your leverage will automatically be reduced to the maximum allowed for your balance.
How does leverage work?
Let’s begin with a leverage ratio of 1:1 (though we do not recommend trading with it). A leverage ratio is a credit ratio. If you have $1,000 in your account, you can only open up $1,000 worth of currency positions at any given time. The idea of leveraged trading is that you can open up a larger amount of currency positions on your account with less money.
James has an account with a leverage ratio of 1:100. If he opens a position for 100,000 EUR/USD at the rate of 1.2000, his margin requirement will be:(100,000 x 1.20) / 100 = $1,200Therefore, to open up a trade of $120,000 worth of Euros, James only requires $1,200 of margin. This is all because of leverage.
We do not recommend using a real leverage ratio greater than 1:200 in trading, but the decision ultimately up to you. Our system allows you to have a leverage ratio up to 1:1000.
Please keep in mind that leveraged trading is very risky and the setting the leverage too high and trading large lot sizes can quickly lead to large losses. Be careful and pay attention to your margin levels to minimize your risk of loss!