Jp markets maximum leverage

As with any other withdrawal process, you need to have proof of documentation before you submit your withdrawal request.

Free forex bonuses

JP Markets Review, jp markets maximum leverage.

This includes scanned copies of your ID, bank statements and proof of address, all confirming your details as per regulations from the FSB. You may wonder why the base is in south africa. One reason is that many investors view south africa as a country with great potential, since it is among the most developed countries on the continent. The regulator, FSA, has enforcing powers that allow it to deal with breaches in forex brokerage, while it also runs the office of the omud for financial services providers, which is a customer complaints service.

JP markets review

JP markets is among the many forex markets that are increasing in popularity. It gives its clients a single type of account with variable spreads, as well as additional benefits. However, the site does not allow the use of (EA) automated strategies, scalping and hedging.

Who is behind JP markets?

Established in 2016, JP markets is a forex broker that has its base in south africa, and happens to be the leading african and south african forex broker, with services expanding into other countries such as bangladesh, swaziland, kenya and pakistan.

The company operates under approval from the financial services board (FSB), south africa, FSP 46855. This gives the technology and platform allowing african-based clients to trade successfully in forex markets around the world.

JP markets focuses on assisting clients at a localized level through customer service as well as tools that can assist in succeeding on that front. The company prides itself on being the only brokerage worldwide that gives interest on trading accounts (this is subject to a specific minimum balance), as well as other industry firsts and benefits to various clients.

The founder is a south african entrepreneur, justin paulsen. He has extensive knowledge on the financial sector, having obtained a degree in economics and finance from the university of cape town. He has also worked with several brokers and forex agencies before setting up the company.

Trading services offered

You can trade up to 30 forex pairs, other cfds, gold, stock indices and oil on the site, which uses the MT4 (metatrader 4) platform.

You may wonder why the base is in south africa. One reason is that many investors view south africa as a country with great potential, since it is among the most developed countries on the continent. The regulator, FSA, has enforcing powers that allow it to deal with breaches in forex brokerage, while it also runs the office of the omud for financial services providers, which is a customer complaints service.

Regulation within the country is not among the best in the world, though there is some level of reliability in the sector. If you are a local broker with a trading license, you need to keep all your client funds in recognized banks in the country within segregated accounts.

Advantages of MT4 trade platform

As the industry standard platform, MT4 lends itself to various traders as an easier alternative, thanks to the richness of its features. It places itself among the leading platform in online trading due to its foreign exchange agency model implementation, unconventional organization of trading, as well as competitive assessments.

You can use algorithmic traders as well as expert advisors (eas), which automate your exchange and make the process easier for you. MT4 allows you to see the marketplace you are dealing with, all within real time, highly accurate and impeccably judge all your exits and entrances.

Accounts available on the platform

Clients have a single account type to choose, and this account comes with no commission fees imposition, fixed spreads, STP (straight through processing) market execution and leverage that reaches a maximum of 1:500. You can get PAMM services as well.

Straight through processing

This service means that the forex broker will send the customer’s order directly to larger brokers or banks without the order passing through a dealing desk. That implies that there are no delays in the process and the processing of transactions is faster.

It has several advantages, which include:

STP brokers make their money through addition of small commissions, which are markups to the spreads

The losses of the client are not the profits of the broker

When the trader loses or wins, the exact markup will go to the broker, so this eliminates conflict of interest

A related aspect to STP is NDD (no dealing desk), which gives brokers access to the inter-bank forex markets. In addition, this eliminates conflict of interest, filling orders and re-quotes.

Deposit and withdrawal options

The platform does not offer a wide range of deposit options. The bank option is ned bank, with the deposit details. Keep in mind that the south african reserve bank (SARB) will always convert international payments to their base rate. Other options include bitcoin, credit and debit cards, neteller and skrill.

You need an initial deposit minimum of R3500, and this is a reasonable amount especially when you compare it to other south african brokers. In addition, allocations of payments can take a maximum of 24 hours on business days (from monday to friday).

An interesting aspect to JP markets is the allowance for sending withdrawal requests through whatsapp, which is unseen on other platforms. The withdrawals are easy and fast to process (the process takes about 24 hours), and you can do the process on official working days from 9am to 5pm.

The platform uses secure and safe ways to send you your money, while all transactions undergo rigorous processing to ensure your money stays safe.

The option is through local bank transfer, as the site does not allow e-wallets or any other mediums of withdrawal. The time it takes to receive funds depends on the bank you use. For instance, standard bank, ABSA, nedbank and FNB allow you to get your money within the same day, while other banks could take up to two days.

As with any other withdrawal process, you need to have proof of documentation before you submit your withdrawal request. This includes scanned copies of your ID, bank statements and proof of address, all confirming your details as per regulations from the FSB.

Keep in mind that all withdrawals that you make through credit cards have an extra fee of R50. For the case of bank transfers, there are no charges for withdrawals, but you are liable for any fees that the individual bank charges in the transaction, including the use of intermediaries.

Commissions, leverages and spreads

The maximum amount of leverage you can get is 1:500, which many investors consider high, even with other brokers offering higher or similar rates.

Note that with higher leverage comes higher risks of losses, and this is the reason many jurisdictions set caps on leverage rates.

Any promotional bonuses?

There are a few promotions that the company offers, which include:

30% welcome on deposit bonus, and this is valid for 60 days

Currently, the minimum amount that qualifies you for any bonus is R3000. There is also not much information regarding bonuses.

The platform does not charge you extra commission fees, which may be a good thing. However, we do not like the spreads, as we find them too wide to be competitive – they are 2.4 pips on average for USD/EUR.

Even though fixed spreads are wider than floating ones generally, many other brokers will offer you a better deal.

Pros of the JP markets platform

The FSB regulates its activities

MT4 is available on the site

Same day deposits and withdrawals are possible

You can trade in rand, other than USD or EUR

There is a limited choice of trading platforms

The spreads are too wide

You cannot use eas, hedging or scalping techniques on the platform

Final thoughts

JP markets is a CFD south african broker and forex company that the FSA regulates actively. They support the MT4 platform, making them easy to use for many traders. However, the spreads are higher than the average, and this unfortunately places many restrictions on trade.

��top broker 2020 SA��

General risk warning: the financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose. For more infomation, read our disclaimer.

High leverage forex brokers

What is forex broker leverage?

The forex trading indeed is known for its leveraged trading possibility, which means that the trader is able to use the leverage strategy or “borrowed” capital as its funding source.

View our complete list fo the best high leverage forex brokers on the planet.

Simply, leverage tool opening opportunities to your trading account operate larger volume and trade currency pairs through an initially small balance.

This method expands trading base and multiplying the initial trading account balance timely, which in return leads to potential bigger returns, yet magnifies higher risks of losses as well.

The leverage level usually expressed as a ratio, means the trader should have at least a particular percentage of the total available volume (e.G. Leverage 1:100 requires 1% of volume).

Is forex a gamble?

Indeed, you may find brokers that allow you to trade with only 5$ at the very beginning which often seems like gambling or a pure scam. However, it is all about a broker you trade with if you would choose a regulated serious broker from a reputable jurisdiction which obliges to legislation laws and constantly overseen it is considered a safe investment.

Which forex brokers are safest to trade with?

Along with leverage great possibility you definitely should stick to a smart choice of the broker as well, since many brokers around are simply scams with tempting income opportunities. So safest and the best forex brokers are the ones that are regulated.

Besides numerous obligations and terms regulated broker follows, authorities also restrict leverage as well, which vary from the jurisdiction to another.

Read more about regulated forex brokers by the link.

Indeed, leverage involves the high potential to lose money easier as well, which caused reputable jurisdictions and respected authorities like US FMA and CFTC along with recent update from european ESMA take necessary measures and limit offered and allowed levels of leverage. Yet, some authorities still offer high ratios

The current maximum for trading financial market in the US regulated broker may offer leverage of 1:50, while the european broker under ESMA allowed using only 1:30

Australian regulation ASIC, which is highly respected for its regulatory guidelines and maintenance of fair, transparent run of australian brokers did not restrict requirement to lower leverage. Thus, forex brokers with ASIC license may offer leverage up to 1:400 or even 1:500.

What leverage is best for newbie?

If you are a newbie or a very beginner in trading, of course, you should first learn deeply how to operate trading safely and use leverage smartly.

It is recommended to choose among forex brokers suitable for beginners since those brokers offering educational materials and support you at first steps.

As for the leverage itself, it is best not to use the highest leverage ratios at the very beginning, but to balance it with a good strategy, also you may check out micro lot trading, which requires smaller amounts and is good for practice.

Do not strive for a million income at your first steps, but better deploy a good strategy and generate wealth step by step.

How to choose forex broker?

As we already see, due to european, US regulations and other restrictions implemented on the leverage it caused many worldwide traders of smaller sizes mainly to search for alternative opportunities. As the majority of international traders are in use to see brokers with high leverage levels like 1:400, 1:500 or even more.

Of course, the choice is yours, but verify with the broker first, as many reputable brokers holding several licenses and run entities in various jurisdictions, so still able to offer higher ratios for leverage by a simple register of account under certain regulation.

In addition, the forex broker review list below designed for you to assist in the selection and defines only serious regulated brokers that offer high leverage ratios. So see below detailed reviews along with professional research materials including trading conditions, spreads, traders’ comments and more.

What is the most important thing to keep in mind in forex trading?

What we can conclude is that while the majority of companies recently use low leverage ratios, it is solely a choice of a trader under which entity to trade and either use brokers with high leverage ratios or not. You should keep in mind involved high risks in forex trading, especially when you use leverage.

From our side, it is important to deliver a message about leverage risks and courage our readers or traders to learn how to use leverage smartly in order to perform better trading. And, of course, do not be allured by the highest ratios of leverage alike 1:1000, it should actually alert any trader, as such levels are extremely risky and are used only by the brokers that are either offshore or nor regulated at all, which should be avoided by any cost.

How leverage works in the forex market

Leverage is the use of borrowed money (called capital) to invest in a currency, stock, or security. The concept of leverage is very common in forex trading. By borrowing money from a broker, investors can trade larger positions in a currency. As a result, leverage magnifies the returns from favorable movements in a currency's exchange rate. However, leverage is a double-edged sword, meaning it can also magnify losses. It's important that forex traders learn how to manage leverage and employ risk management strategies to mitigate forex losses.

Key takeaways

Leverage, which is the use of borrowed money to invest, is very common in forex trading.

By borrowing money from a broker, investors can trade larger positions in a currency.

However, leverage is a double-edged sword, meaning it can also magnify losses.

Many brokers require a percentage of a trade to be held in cash as collateral, and that requirement can be higher for certain currencies.

Understanding leverage in the forex market

The forex market is the largest in the world with more than $5 trillion worth of currency exchanges occurring daily. Forex trading involves buying and selling the exchange rates of currencies with the goal that the rate will move in the trader’s favor. Forex currency rates are quoted or shown as bid and ask prices with the broker. If an investor wants to go long or buy a currency, they would be quoted the ask price, and when they want to sell the currency, they would be quoted the bid price.

For example, an investor might buy the euro versus the U.S. Dollar (EUR/USD), with the hope that the exchange rate will rise. The trader would buy the EUR/USD at the ask price of $1.10. Assuming the rate moved favorably, the trader would unwind the position a few hours later by selling the same amount of EUR/USD back to the broker using the bid price. The difference between the buy and sell exchange rates would represent the gain (or loss) on the trade.

Investors use leverage to enhance the profit from forex trading. The forex market offers one of the highest amounts of leverage available to investors. Leverage is essentially a loan that is provided to an investor from the broker. The trader's forex account is established to allow trading on margin or borrowed funds. Some brokers may limit the amount of leverage used initially with new traders. In most cases, traders can tailor the amount or size of the trade based on the leverage that they desire. However, the broker will require a percentage of the trade's notional amount to be held in the account as cash, which is called the initial margin.

Types of leverage ratios

The initial margin required by each broker can vary, depending on the size of the trade. If an investor buys $100,000 worth of EUR/USD, they might be required to hold $1,000 in the account as margin. In other words, the margin requirement would be 1% or ($1,000 / $100,000).

The leverage ratio shows how much the trade size is magnified as a result of the margin held by the broker. Using the initial margin example above, the leverage ratio for the trade would equal 100:1 ($100,000 / $1,000). In other words, for a $1,000 deposit, an investor can trade $100,000 in a particular currency pair.

Below are examples of margin requirements and the corresponding leverage ratios.

Margin requirements and leverage ratios
margin requirement	leverage ratio
2%	50:1
1%	100:1
.5%	200:1

the equivalent leverage ratio as a result of the margin requirement.

As we can see from the table above, the lower the margin requirement, the greater amount of leverage can be used on each trade. However, a broker may require higher margin requirements, depending on the particular currency being traded. For example, the exchange rate for the british pound versus japanese yen can be quite volatile, meaning it can fluctuate wildly leading to large swings in the rate. A broker may want more money held as collateral (i.E. 5%) for more volatile currencies and during volatile trading periods.

Forex leverage and trade size

A broker can require different margin requirements for larger trades versus smaller trades. As outlined in the table above, a 100:1 ratio means that the trader is required to have at least 1/100 = 1% of the total value of the trade as collateral in the trading account.

Standard trading is done on 100,000 units of currency, so for a trade of this size, the leverage provided might be 50:1 or 100:1. A higher leverage ratio, such as 200:1, is usually used for positions of $50,000 or less. Many brokers allow investors to execute smaller trades, such as $10,000 to $50,000 in which the margin might be lower. However, a new account probably won't qualify for 200:1 leverage.

It's fairly common for a broker to allow 50:1 leverage for a $50,000 trade. A 50:1 leverage ratio means that the minimum margin requirement for the trader is 1/50 = 2%. So, a $50,000 trade would require $1,000 as collateral. Please bear in mind that the margin requirement is going to fluctuate, depending on the leverage used for that currency and what the broker requires. Some brokers require a 10-15% margin requirement for emerging market currencies such as the mexican peso. However, the leverage allowed might only be 20:1, despite the increased amount of collateral.

Forex brokers have to manage their risk and in doing so, may increase a trader's margin requirement or reduce the leverage ratio and ultimately, the position size.

Leverage in the forex markets tends to be significantly larger than the 2:1 leverage commonly provided on equities and the 15:1 leverage provided in the futures market. Although 100:1 leverage may seem extremely risky, the risk is significantly less when you consider that currency prices usually change by less than 1% during intraday trading (trading within one day). If currencies fluctuated as much as equities, brokers would not be able to provide as much leverage.

The risks of leverage

Although the ability to earn significant profits by using leverage is substantial, leverage can also work against investors. For example, if the currency underlying one of your trades moves in the opposite direction of what you believed would happen, leverage will greatly amplify the potential losses. To avoid a catastrophe, forex traders usually implement a strict trading style that includes the use of stop-loss orders to control potential losses. A stop-loss is a trade order with the broker to exit a position at a certain price level. In this way, a trader can cap the losses on a trade.

Jp markets maximum leverage

The foreign exchange market is a decentralized, over-the-counter (OTC) global market. The daily volume of the forex market surpasses $4 trillion a day worldwide. To put this in perspective the daily volume traded on the new york stock exchange is $25 billion making it the largest financial market in the world. The total forex volume is well over three times the total amount of the stocks and futures markets combined.

The participants of the forex market include banks, corporations, institutional investors, hedge funds and individuals. In simple terms forex trading is where you can buy and sell currencies, simultaneously. The way it works is much like the process of currency exchange at airports or hotels where you can exchange the currency you deal with for the local currency. The forex market is open 24 hours a day 5 days a week, enabling traders to buy and sell around the clock acting on global news events as they happen.

JP markets allows individual traders the opportunity to access currency prices previously only available to large institutions and wealthy individuals.

History of the forex market

Foreign exchanges markets we first developed to facilitate cross border trade conducted in different currencies by government, companies and individuals. In the early days the foreign exchange markets primarily existed to facilitate the international movement of money, however even in the early days there were speculators.

These days a large portion of the forex market is driven by speculation, arbitrage and professional dealing. In the past retail investors could only gain access to the foreign exchange market through banks that transact large amounts or currencies for commercial and investment purposes. Trading volume has increased rapidly over time, especially after exchange rates were allowed to float freely in 1971.

Throughout the 80s and 90s access to the forex market was limited to banks, funds, commodity trading advisers (ctas) managing large sums of money, large corporations and big investors. Access was afforded to this group as they were able to meet the strict credit guidelines established by banks that smaller investors were unable to meet.

As the forex market grew, it gained increasing recognition as a means for individuals to speculate in global markets and in the early 2000’s the online forex trading market was born. Online forex brokers establish the ‘line of credit’ with a bank, otherwise known as a prime brokerage agreement. This negates the need for individuals to have the deep pockets previously required for individuals to trade in the forex market.

It has gained significantly in popularity since the global financial crisis as investors seek ways to diversify their portfolios and generate returns not correlated with traditional markets such as equities and real estate. Investors are drawn to the high volatility of the forex market, benefiting from the ability to go long or short, generating leveraged returns in rising and falling market.

How does forex trading work?

Forex trading is similar to trading share or futures except that when trading forex you are buying or selling one currency against another. One of the key advantage forex trading has over other financial instruments is that relatively small lot sizes can be traded, lot sizes can be as small as 1000 units or one micro lot. Typically forex trading also involves leverage which in some cases can be as high as 1:500, this is very different to trading shares where no leverage is involved. Leverage allows traders to trade with more money than they actually have in their trading account, for example if you had 1:100 leverage you could use a $1,000 deposit to control $100,000 worth of currency. Using leverage can result in an increase in you gains however if not used correctly it can also result in increased losses.

Forex pricing

Every currency pair consists of a base currency and a term/quoted currency. The first currency in the pair is the base currency, the second is the quote or term currency.

As an example with the EUR-USD currency pair:

EUR = base currency USD = term currency

Bid: the rate at which you can sell the base currency. This is the first rate on the deal ticket below (1.19204).

Ask (or offer): the rate at which you can buy the base currency. This is the second rate on the deal ticket and can be found on the right (1.19228).

Spreads

The spread of a currency pair is the difference between the bid and the ask rate. JP markets offers some of the tightest spreads of all forex brokers globally, our spreads can be seen on our trading platform.

A pip represents the smallest increment that an exchange rate can move. One pip is 0.01 for currency pairs with JPY as the term currency and 0.0001 for all other pairs. JP markets offers fractional pip pricing which represents a tenth of a pip. This is to improve the spread offered to clients and improve the precision with which they can trade.

Margins

Margin is the amount of money required in your account in order to open a position. Margin is calculated based on the current price of the base currency against USD, the size (volume) of the position and the leverage applied to your trading account. If you do not have sufficient free equity available you will be unable to open a position on the trading platform. The free margin amount shown in the trading platform is the amount you have available to use should you wish to open additional positions.

Common order types

The three main types use in forex are stops, limits and market orders. Depending on whether you want to be a buyer or seller, above or below or at the market price will determine which of the below orders you should be using.

Buy stop – buy order above the current market price sell limit – sell order above the current market price market execution – buy or sell order at the current market price buy limit – buy order below the current market price sell stop – sell order below the current market price

Stop orders are commonly used for breakout and momentum style strategies. They buy in a rise market and sell and a falling market. Traders will often place these orders above resistance or below support, trading a break of these levels.

Limit orders are used by range and counter-trend traders. Limit orders sell into a rising market and buy into a falling market. Because of this they are preferred by more experienced traders who are able to place these order types at key resistance and support levels, picking market swing points.

Market orders are orders to buy at the current ask (offer) rate or sell at the current bid rate.

Stop loss orders are orders to close a position at a predefined level set by the trader. This would normally be at a loss. These are technically stop buy and stop sell orders.

Take profit orders are orders to close a position at a predefined level, normally at a profit. These orders are limit orders.

What influences buying and selling?

At the most basic level, the only thing that will ever move an exchange rate is the supply and demand for that particular currency at a given point in time. In other words, if a currency is to rally there will be excess demand in the market causing this increase in price. The opposite is true if a currency is to fall in value, there will be excess supply in this case.

Any speculative transaction in the forex market is entered into on the premise that future exchange rates will move in such a direction that the position becomes profitable. The below points give reasons why participants may form a buy or sell bias based on their understanding of the future direction of exchange rates.

Fundamentals – economic, social and political; data, reports and news that market participants can use to determine whether they want to be buyers or sellers of a currency. For example; investors chasing yield would invest in a currency pair with a wide interest rate differential such as the AUD/USD. This is known as the carry trade, where investors will borrow funds from a country with low interest rates and invest them in a country with higher rates.

Geopolitical outlook for a county or region – assessing the economic and political stability of a country or region and using this assessment to determine whether an investment opportunity may arise. For example, shorting the USD against the majors during the iraq war had two benefits; the declining fiscal situation of the US due to the ballooning costs of the war and declining investor confidence.

Trade flows – importers and exporters buying and selling currencies to make and receive payments for the goods and services they deal in. For example; japanese companies selling their cars to US will require at some point a conversion from dollars to yen. This will increase the demand for the yen potentially causing it to strengthen.

Capital flows – speculative and investment flows into and out of a currency to take advantage of higher yields, equity markets, portfolio investments and mergers and acquisitions.

Technical analysis – the study of price on charts to make trading decisions. Technical indicators and analysis can give entry and exit signals for tor trades.

Market sentiment and climate – this can be anything from the investor confidence and the attitude of the market to risk, to the liquidity in the market.

Forex terminology

Below are some of the more frequently asked questions relating to commonly used forex terminology traders ask before starting to trade forex.

What does the term ‘spread’ mean?

Spread is the difference between the BID and the ASK price of a currency pair.

How many decimal places does JP markets quote to?

JP markets quotes all currency pairs to 5 decimal places. A pair quoted in 5 decimal places would appear as 0.00010 on the trading platform.

For example: if the AUD/USD moves from 1.04054 to 1.04064, the 0.00010 USD move higher represents a one pip move.

What is hedging?

Hedging is when a new position is opened in the opposite direction of an existing position on the same currency pair.

For example: in order to hedge a long position of 1 lot on EUR/USD, you would need to sell a 1 lot position also.

Hedging does not require any additional margin but in fact reduces the overall margin on the position as the positions now offset each other.

What is leverage?

Leverage give you the ability to open a larger position than you would otherwise be able to. JP markets offers a maximum leverage of 500:1, this means for every $1 that you have in your trading account you are able to open a position worth $500.

Leverage offers traders the ability to make larger profits from small price movements, and, at the same time, risk only minimal capital on a position.

It is however important to note that although leverage can substantially increase your profits it can also substantially increase your losses as well, it is for this reason you should have a good risk management strategy in place.

What is a margin call?

A margin call occurs when the balance of your account is not sufficient to be able to maintain the margin on your current open positions. If the market moves against you, you will need to deposit additional funds into your trading account to maintain your open positions or run the risk of your positions being automatically closed, this is known as ‘liquidation’. Your positions can be liquidated without warning so it is important to maintain sufficient margin in your account at all times to avoid this from happening.

Best high leverage forex brokers 2021

Online trading has become more accessible for the average person since the rise of the internet. Brokerage houses quickly spotted the opportunity and provided retail traders access to the financial markets via leverage.

Trading financial markets, like the FX market, can be expensive and without leverage simply impossible for the retail trader. Leverage, however, is a double-edged sword – while it enables traders to multiply their position sizes, it also increases the risk involved.

Top brokers for leverage

Below is the choice of forex brokers who provide 500:1 and 400:1 leverage options. Let’s compare!

Do you know another forex broker that offers the highest leverage of 400:1 or higher?
Please suggest by adding a comment below.

What is leverage?

Simply put, leverage acts as a multiplier of a trader’s capital. Enabled by the broker, this allows the trader access to markets they would not be able to otherwise trade.

Leverage determines the amount traders move on the actual market. For instance, on a trading account having a leverage of 400:1, traders move on the real market 400 times more than the actual position in their retail account.

How does leverage work?

The leverage level of a broker is usually expressed as a ratio. It demonstrates a particular percentage of the total available capital that a trader is required to have in their account (e.G. Leverage 1:100 requires 1% margin).

Trading with leverage is common and simple as the only requirement is for a margin minimum held by the trader. It establishes the amount of money a broker requires from a trader to open a position and is expressed in percentages.

So let’s look at how leverage trading works:

A trader wants to open a trade with a contract size of 100,000 per lot but does not have the $130,000 to put down.

Using leverage of 1:500, he or she can dramatically reduce the amount of capital required.
$130,000 / 500 (leverage used) = $260.00 required capital

Using this leverage size, we can use a simple formula to work out the amount of investment needed:

Buy trade: ask price x contract size / leverage

Sell trade: bid price x contract size / leverage

1 lot = 100,000 contracts (contracts worth is based on the underlying instrument which in this case is GBP)

GBP/USD, 100 000 contracts are worth 100 000 units of GBP.

What is leverage trading?

Leverage trading increases the accessibility to financial markets by enabling retail traders to trade more significant volumes than otherwise possible. For instance, in a 1:1 leverage trading account, one can move on the market $1 for every $1 in the trading account. That’s not enough to trade multiple positions, and the volume moved would be so small that it won’t impact the value of a trading account.

Without leverage, the margin needed for a trade would often exceed the size of the account, making it impossible for retail traders to participate. In other words, to move $200,000 on the market you’ll need to come up with a deposit of $200,000, whereas only $1000 in a 200:1 leveraged account.

How to use leverage correctly

Money management is key when trading with high leverage. First, it is important to know how much a pip movement affects the trading account. That helps to establish the risk for each trade. Second, make sure that the target exceeds the risk involved.

For instance, if the risk per each trade is 1%, the reward should exceed 1%. For some, the minimum risk-reward ratio for each trade is 1:2, meaning the trading account stands to make $2 for every $1 risked on any given trade. This way, traders avoid the negative effects of leverage and benefit from it.

Guide to find a high leverage broker?

There are many forex brokers in the marketplace that offer high leverage trading. To make an informed choice, it’s best to consider several factors:

Do they offer a demo account?

What trading platform are they using (MT4/MT5)?

Where are they regulated?

What platforms do they offer?

How much leverage do they offer?

What are the fees and on-going costs?

Which brokers offer high leverage?

Some forex brokers limit the maximum leverage on currency pairs to 1:25, 1:50, or a similar ratio. Obviously, these brokers are acting outside of jurisdictions imposing such restrictions. Current maximums on forex instruments that regulated forex brokers in the US may offer only leverage of 1:50, while the european broker under ESMA allowed using only 1:30.

It is not uncommon for some high leverage forex brokers to offer accounts in their offshore subdivisions with a much higher leverage under the same company management.

It is recommended to look into the average leverage offered across different asset classes to get a feel for what’s reasonable. For example, the maximum leverage for various financial instruments and commodities may look as follows:

Forex – 1:500
metals – 1:500
indices – 1:200
energy – 1:200
crypto – 1:100

Pros and cons of high leverage

Forex trading and high leverage pair well together as the number of people interested in entry into the speculative financial markets increases. As with every other financial instrument, there are inherent risks, but when handled with caution – high leverage trading on the forex market carries certain advantages.

It opens opportunities to trade larger volume of currency pairs with an initially small balance.

Traders can use “borrowed” capital as a funding source for forex trading.

Multiple respected authorities like US FMA and CFTC, australian ASIC and european ESMA oversee and issue regulatory guidance on high leverage trading.

Free demo accounts to learn before trading with real money.

It opens access to many new markets, previously unaffordable for small traders and investors.

Minimal margin requirements.

There is a high potential to lose funds more easily.

Some forex brokers offer unreasonably high leverage ratios (alike 1:1000)

Many offshore brokers who circumvent industry and regulatory standards.

Traders are prone to taking higher risks to ‘win big’.

Calculating profits in high-leverage trading

Leveraged forex trading extends certain margin privileges to traders in good faith as a way to facilitate more efficient trading of currencies. This means it is essential that traders maintain at least the minimum margin requirements for all open positions at all times in order to avoid any unexpected liquidation of trading positions.

While high-leverage forex trading carries certain risks – it also opens greater possibilities to accessing bigger lots and making greater profits.

Examples

Without leverage

If you wanted to open a position size of $10,000 (0.1 lots) and trade without leverage, you’d have to have at least that amount in your account. While the risk depends on your stop loss, let’s assume a 20 pip stop loss of 0.1 EURUSD is a risk of about $30, which is roughly 0.3% of the $10,000 position size.

With leverage

If you’re trading with a leverage of 100:1 and have entered a $100,000 position, the broker will set aside $1,000 from your account. The 100:1 leverage means you are now controlling $100,000 with $1,000.

Let’s say the $100,000 investment rises in value to $101,000 or $1,000. That means your ROI is 100% ($1,000 gain / $1,000 initial investment).

Can all traders use high leverage?

While all forex broker clients can use some form of leverage, not all can use high leverage to trade. Following the 2018 measures to protect retail clients, ESMA does not consider highly leveraged trading to be suitable for all investor types.
Retail clients are those who enjoy lower leverage and higher protections while professional clients have access to higher leverage and fewer regulatory restrictions but are confident they can manage the risks that go along.
ESMA has put in place various intervention measures on cfds, including establishing the maximum leverage limits available to the different client classifications, based on the trading instrument.

For retail client leverage limits are:

1:30 (3.33% margin) for forex majors
1:20 (5% margin) for main index cfds, forex small caps and gold cfds
1:10 (10% margin) for other commodity cfds except gold
1: 5 (20% margin) for individual stocks (equity cfds) and other underlyings
1:2 (50% margin) for cfds on cryptocurrencies

For professional client leverage limits are:

Up to 1:500 (0.2% margin) for forex majors, forex minors, some indices (ASX200, DAX30, DJI30, FTSE100, NQ100, SP500), and some commodities (gold, silver, XAUAUD, WTI and BRENT)
up to 1:200 (0.5% margin) for remaining indices and bonds
up to 1:100 (1% margin) for remaining commodities
up to 1:25 (4% margin) for forex exotics
UP to 1:20 (5% margin) for individual stocks (equity cfds) and cfds on cryptocurrencies

What are the main leverage ratios?

There are various levels of leverage and their use depends on the types of broker accounts and capital owned by the traders. Generally, the top most popular leverage ratios are:

1:20

1:33

1:50

1:100

1:200

Can US traders use high leverage?

US forex brokers are very restrictive in the leverage they offer, especially following the financial collapse in 2008. As per the commodity futures commission (CFTC) rule from october 2010, the maximum leverage available to US residents is 50:1.

The dodd frank act further prohibits US clients from trading forex with a counterparty that is not regulated in the US.

Risk management with forex leverage

There are widely accepted rules that investors should review when selecting a leverage level. The three basic rules of leverage are:

Maintain low levels of leverage.
Use trailing stops to reduce downside and protect capital.
Keep positions small and limit capital to 1% to 2% of the total trading capital on each position taken.

When you follow these rules, you can better manage leverage. New traders should be cautious about the forex leverage level they select and make a choice based on their trading experience, risk tolerance and comfort when operating in the global currency markets. Remaining conservative and trading only with the best high leverage brokers in 2020, is a good start to start building experience.

Is trading with leverage dangerous?

No, if a trader understands the simple basics of leveraged trading.

Yes, if a trader has no clues about what he is doing.

High leverage enables forex traders to trade larger capitals with multiple types of trades. Without leverage the majority of individual investors won’t be able to operate in the forex environment today.

Trading with high leverage is riskier than with low leverage. However, this is dependant on your risk management.

Recently regulators stepped in and tightened the conditions for trading with leverage. Of course, the idea is to protect the retail trader, but brokers hope to lower risks by closing the opening positions when there isn’t sufficient capital in the trading account before losses exceed deposits.

Moreover, high leverage accounts leave more free margin available to trade with. This way, traders can find more trading opportunities from a range of markets.

Conclusion

Leverage is one of the reasons why online trading is so popular. Without leverage, many retail traders couldn’t afford to trade.

Moreover, high leverage means less margin is required. This leaves more funds available in the trading account for new trades and potential drawdown.

Tight money management rules coupled with high leverage is the perfect combination for ambitious traders in search of ways to beat the financial markets. One without the other makes it difficult to reach financial independence.

High leverage forex brokers

What is forex broker leverage?

The forex trading indeed is known for its leveraged trading possibility, which means that the trader is able to use the leverage strategy or “borrowed” capital as its funding source.

View our complete list fo the best high leverage forex brokers on the planet.

Simply, leverage tool opening opportunities to your trading account operate larger volume and trade currency pairs through an initially small balance.

This method expands trading base and multiplying the initial trading account balance timely, which in return leads to potential bigger returns, yet magnifies higher risks of losses as well.

The leverage level usually expressed as a ratio, means the trader should have at least a particular percentage of the total available volume (e.G. Leverage 1:100 requires 1% of volume).

Is forex a gamble?

Which forex brokers are safest to trade with?

Besides numerous obligations and terms regulated broker follows, authorities also restrict leverage as well, which vary from the jurisdiction to another.

Read more about regulated forex brokers by the link.

The current maximum for trading financial market in the US regulated broker may offer leverage of 1:50, while the european broker under ESMA allowed using only 1:30

Australian regulation ASIC, which is highly respected for its regulatory guidelines and maintenance of fair, transparent run of australian brokers did not restrict requirement to lower leverage. Thus, forex brokers with ASIC license may offer leverage up to 1:400 or even 1:500.

What leverage is best for newbie?

If you are a newbie or a very beginner in trading, of course, you should first learn deeply how to operate trading safely and use leverage smartly.

It is recommended to choose among forex brokers suitable for beginners since those brokers offering educational materials and support you at first steps.

Do not strive for a million income at your first steps, but better deploy a good strategy and generate wealth step by step.

How to choose forex broker?

What is the most important thing to keep in mind in forex trading?

Margin & leverage

What is margin?

Margin is equity from your account set aside by FOREX.Com to maintain a position when you’re trading on leverage.

What is leverage?

Leverage is the ability to control a large position with a small amount of capital. It is usually denoted by a ratio. For example, if your account has a leverage of 50:1, that means you can trade a position of $50,000 with only $1,000.

Please note that increased leverage increases risk.

What are the margin requirements at FOREX.Com?

Our margin requirements differ according to platform (FOREX.Com or metatrader), market, asset class and position size. You can find the specific margin of each instrument in its market information sheet on the FOREX.Com desktop platform or view our list of margin requirements by product.

To calculate the amount of funds required to cover the margin requirement when you open a trade, simply multiply the total notional value of your trade (quantity x price of instrument) by the margin factor.

For example, say the margin requirement for EURUSD is 2%. The current buy price of EURUSD is 1.300 and you wish to buy 1 standard lot (100,000).

The total value of the position is $130,000 (100,000 x 1.300). $2,600 would therefore be allocated from your account to open the position ($130,000 x 2%).

With FOREX.Com platforms, you can calculate the required margin before placing a trade through the platform’s margin calculator, monitor each position’s margin requirement separately or review your account’s total margin requirement through the margin indicator.

How do I change my account leverage or margin?

What are step margin levels?

The larger the trade size, the higher the risk level associated with the trade. Therefore, we may increase our margin requirements for larger size trades or any additional trades in that instrument. To do this, FOREX.Com increases the size of the margin requirement at specific quantity levels, known as step margin levels. You can view a market’s step margin levels in its market information sheet within the FOREX.Com desktop platform.

Step margins are not present in metatrader 4.

Can my account go negative?

While our 100% margin requirement and real-time margin system is designed to limit your trading losses and help ensure that total losses never exceed your total account balance, you do risk incurring losses greater than your account balance, especially during periods of extreme market volatility. While it is not FOREX.Com’s policy to hold clients responsible for modest negative balances, we do reserve the right to hold clients responsible for large debit balances and when special circumstances apply. For this reason, we strongly encourage you to manage your use of leverage carefully.

You can request a change to your level of leverage by filling out a margin change request form and submitting it to [email protected] .

How leverage works in the forex market

Key takeaways

Leverage, which is the use of borrowed money to invest, is very common in forex trading.

By borrowing money from a broker, investors can trade larger positions in a currency.

However, leverage is a double-edged sword, meaning it can also magnify losses.

Many brokers require a percentage of a trade to be held in cash as collateral, and that requirement can be higher for certain currencies.

Understanding leverage in the forex market

Types of leverage ratios

Below are examples of margin requirements and the corresponding leverage ratios.

Margin requirements and leverage ratios
margin requirement	leverage ratio
2%	50:1
1%	100:1
.5%	200:1

the equivalent leverage ratio as a result of the margin requirement.

Forex leverage and trade size

Forex brokers have to manage their risk and in doing so, may increase a trader's margin requirement or reduce the leverage ratio and ultimately, the position size.

The risks of leverage

Guide to leverage

What is leverage in trading?

Leveraged trading is a powerful tool for CFD traders. It can help investors to maximise returns on even small price changes, to grow their capital exponentially, and increase their exposure to their desired markets. But it is worth noting that leverage can work for or against you. While you stand to earn magnified profits when asset prices go your way, you also suffer amplified losses when prices move against you

When you are trading with leverage, you put a ‘small amount’ down, but you get the chance to control a much larger trade position in the market. The small amount is what is referred to as ‘margin’. The amount of leverage a broker offers depends on the regulatory conditions that it complies with, in any/all of the jurisdictions it is allowed to offer trading services in.

With leveraged trading, the trader need only invest a certain percentage of the whole position. This can change depending on how much leverage the broker offers, how much leverage the trader would like to implement, and it also relies heavily on the regulatory authorities which are tasked with overseeing the online trading industry in that jurisdiction.

Also, traders use leverage depending on their level of experience, investing goals, their appetite for risk, as well as the underlying market they are trading. In most cases, it is professional traders that tend to use leverage more aggressively, whereas new and less experienced traders are generally advised to use leverage with caution. Also, conservative traders will tend to use the minimum level of leverage possible, whereas traders with a high appetite for risk can use leverage flexibly.

The type of market traded can also dictate the amount of leverage traders can use. Volatile markets, such as gold and bitcoin, should be traded with minimal leverage, whereas less volatile assets that do not post wide price fluctuations, such as the EURCHF pair, can be traded with higher leverage levels.

The leverage ratio is a representation of the position value in relation to the investment amount required. At avatrade, forex traders can trade with a leverage of up to . This however, varies depending on your jurisdiction as well as the asset class you are trading.

Consider this: with leverage of 400:1; you can control a $100,000 trade position in the market with just $250! This would mean that a 1% positive price change in the market will result in a profit of $1,000 (1% of $100,000). Without leverage, a 1% positive price movement will result in a profit of only $2.5 (1% of $250). This means that your trade positions and the resulting profits/losses are multiplied 400 times. This is why it is often stated that leverage is a double-edged sword. With trading leverage, profits are magnified, but losses can equally be devastating.

When trading with high leverage, it is very easy to lose more than your capital. But at avatrade, we offer guaranteed negative balance protection which means that you can never lose more than you have in your trading account balance.

What is margin trading?

As explained above, ‘margin’ is the amount of money a broker allows a trader to put down to trade a much bigger position in the market. It is essentially a security deposit held by the broker. When holding trading positions, price changes in the market will lead to changing margin conditions as well. On most platforms, information on the varying margin conditions will be displayed in your trading account. Here are what the various margin definitions and other terminologies mean:

Account balance

This is the total amount available in your account as your trading capital. It is essentially your trading bankroll.

Margin requirement

This is what we have discussed above as the amount your broker requires you to put down as a ‘security deposit’ to control a trade position in the market. It is often expressed as a percentage. For instance, if you use a leverage level of 100:1, your margin requirement is 1%. If you use leverage of 400:1, your margin requirement is 0.25%.

Used margin

This is the amount of money held as ‘security’ by your broker so that you can keep your open trade positions running. The money is still theoretically yours, but you can only access it after the open positions are closed.

Usable margin

This is the money in your trading account available for opening new trade positions in the market.

Margin call

A margin call is a notification by your broker that your margin level has fallen below the required level. This is a dreaded call (notification) for traders. A margin call occurs when losses of an open trade position exceed (or are about to exceed) your used margin. When you receive a margin call, you are essentially being asked to add more funds to your trading account to sustain open trades, failing which the broker will proceed to automatically close the open position. For instance, a margin call level of 20% means that your broker will send the margin call notification when your open trades have sustained losses of over 80% of your account balance.

Open your leveraged trading account at avatrade or try our risk-free demo account!

Pros and cons of leveraged trading

Pros of leverage

Boosts capital. Leverage boosts the capital available to invest in various markets. For instance, with a 100:1 leverage, you effectively have control of $100,000 in trading capital with only $1,000. This means that you can allocate meaningful amounts to various trade positions in your portfolio.

Interest-free loan. Leverage is essentially a loan provided by your broker to allow you to take a bigger position in the market. However, this ‘loan’ does not come with any obligations in the form of interest or commission and you can utilise it in any manner that you wish when trading.

Magnified profits. Leveraged trading allows traders to earn magnified profits from trades that go in their favour. Profits are earned out of the trade position controlled and not the margin put down. This also means that traders can earn substantial profits even if underlying assets make marginal price movements.

Mitigating against low volatility. Price changes in the markets usually occur in cycles of high and low volatility. Most traders like trading highly volatile markets because money is made out of price movements. This means that periods of low volatility can be particularly frustrating for traders because of the little price action that occurs. Thankfully, with leveraged trading, traders can potentially bank bigger profits even during these seemingly ‘dull’ moments of low volatility.

Trading premium markets. Leverage makes it possible for traders to trade instruments that are considered to be more expensive or prestigious. Some instruments are priced at a premium and this can lock out many retail investors. But with leverage, such markets or assets can be traded and expose the average retail investor to the many trading opportunities they present.

Cons of leverage

Amplified losses. The biggest risk when trading with leverage is that, like profit, losses are also amplified when the market goes against you. Leverage may require minimal capital outlay, but because trading results are based on the total position size you are controlling, losses can be substantial.

Margin call risk. The dreaded ‘margin call’ from your broker occurs when floating losses surpass your used margin. Because leverage amplifies losses, there will always be an ever-present ‘margin call’ risk when you have open trading positions in the fast and dynamic financial markets.

Example of leverage trading – retail clients

Let’s look at another example, this time with gold. The price of one troy ounce of gold is $1,327. The trader believes the price is going rise and wishes to open a large buying position for 10 units.

The full price for this position will be $13,270, which is not only a large amount to risk, but many traders do not possess such amounts.

With a 20:1 leverage offered by avatrade, or a 5.00% margin, the amount will decrease substantially. Meaning that for every $20 of worth in the position, the trader will need to invest $1 out of his account, which comes to $663.5 only.

Open your leveraged trading account at avatrade or try our risk-free demo account!

Margin call – how it works

In order to employ leverage, a trader must have sufficient funds in his account to cover possible losses. Each broker has different requirements. Avatrade requires a retail trader to possess equity of at least 50% of his used margin for metatrader 4 and avaoptions accounts.

Going back to the example above, the position’s original value is $13,270; for both metatrader 4 and FX options trading accounts. With leverage, the trader invests $663.5 of his capital, and if he has 50% of this used margin in equity, i.E. $331.75, his positions will be kept opened.

If, however, the trader has losses and his equity drops below 50% of used margin on metatrader 4 and avaoptions accounts, the broker will shut down the client’s position(s), in a “margin call”.

On avaoptions all the client’s positions will be closed, while metatrader 4 will shut down the largest losing position first, and will continue to close positions until the equity level returns above 50% of the used margin.

Example of leverage trading – pro/non EU clients

In this example, we’ll take the price of one troy ounce of gold at $1,327. The trader believes the price is going to rise and wishes to open a large buying position for 10 units. The full price for this position would be $13,270, which is not only a large amount to risk, but many traders may not possess such amounts. Using the 200:1 leverage offered by avatrade, or a 0.50% margin, the amount will decrease substantially. Meaning that for every $200 of worth in the position, the trader will need to invest $1 out of his account, which comes to just $66.35.

Margin call – pro/non EU clients

In order to employ leverage, a trader needs to have sufficient funds in his account to cover possible losses. Each broker has different requirements, and avatrade requires a pro/non – EU trader to possess equity of at least 10% of his used margin for metatrader 4 and avaoptions accounts.

Going back to the example above, the position’s original value is $13,270 for both metatrader 4 and FX options trading accounts.

With leverage the trader invests $66.35 of his capital, and if he has 10% of this used margin in equity, i.E. $6.64, his positions will be kept opened.

If, however, the trader has losses and his equity drops below 10% of used margin on metatrader 4 and avaoptions accounts, the broker will shut down the client’s positions.

On avaoptions all the client’s positions will be closed simultaneously, while metatrader 4 will shut down the largest losing position first, and will continue to close positions until the equity level returns above 10% of the used margin.

Leverage trading with avatrade

Avatrade offers many instruments, and each has a different leverage available which can also change based on the trading platform you choose to work with. It is important to make sure you know the available leverage before you start trading.

In order to avoid a margin call always make sure you have enough equity in your account’s balance so you can continue your trades undisturbed.

Finally, it’s worth trying out our avaprotect feature. It is a risk management tool that protects your open positionsif you set it up before you open the trade.

It lasts as long as you want it to, and if your trade is losing upon expiry, you will get all the money back into your account, minus the fee you paid for the avaprotect™ facility.

Leverage main faqs

Because avatrade uses a 50% margin requirement and the use of the margin call your risk of excessive trading losses that exceed the total balance of your account is minimized, but it is not eliminated completely. During a period of extreme volatility, it is possible that a position could move so rapidly against you that it is not possible to liquidate a losing position in time to keep your account balance from going negative. To avoid this, we strongly recommend that you manage your use of leverage wisely.

While leverage and margin are closely interconnected, they are not the same thing. Both do involve borrowing in order to trade in the financial markets, however leverage refers to the act of taking on debt, while margin is the actual money or debt that the trader has taken on to invest in financial markets. So, leverage is referred to as a ration, such as 1:30 or 1:100, which indicates how much debt can be taken on to open a position, while margin is referred to as the actual amount borrowed to create the leverage. For example, with 1:100 leverage you can control $100 of an asset with only $1 in margin.

Leverage is a very complex financial tool and should be respected as such. While it sounds fantastic in theory, the reality can be quite different once traders come to realize that leverage doesn’t only magnify gains, but it also magnifies losses. Any trade using leverage that moves against the trader is going to create a loss that is much larger than it would have been without the use of leverage. This is why caution is recommended until more experience with leverage is gained. This can lead to a longer and more prosperous trading career.

Open your leveraged trading account at avatrade or try our risk-free demo account!

We recommend you to visit our trading for beginners section for more articles on how to trade forex and cfds.

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