The arithmetic
Leverage of 30:1 means the position can be 30 times the margin. Margin = position value ÷ leverage. Example (E): 0.20 lot of EUR/USD at an example price of 1.1000 is $22,000 of currency. At 30:1 the margin is $733.33.
Leverage sets margin, not risk
The loss on a trade is set by the size and the stop, not by the leverage. Same trade as above, with a 25-pip stop (a pip is worth $2.00 at 0.20 lot):
| Leverage | Margin required | Loss if the 25-pip stop is hit |
|---|---|---|
| 10:1 | $2,200.00 | $50.00 |
| 30:1 | $733.33 | $50.00 |
| 100:1 | $220.00 | $50.00 |
| 500:1 | $44.00 | $50.00 |
The loss is $50.00 in every row. Higher leverage only lowers the margin needed, which makes it easier to open a position far too large for the account. The danger is the size you choose, which is why sizing from your risk comes first. Use the margin calculator to see the margin for any size.
Margin call and stop-out
If losses reduce your equity until it is too low for the margin held, the broker may ask for more funds or close positions. The level at which this happens differs by broker. Under the EU retail rules a provider must close out positions when equity falls to 50% of the margin required.
Regulatory limits
EU retail CFD limits adopted in 2018 by ESMA (the European Securities and Markets Authority) set maximum leverage by underlying:
| Underlying (retail CFDs, EU measure of 2018) | Maximum leverage |
|---|---|
| Major currency pairs | 30:1 |
| Other currency pairs, gold, major indices | 20:1 |
| Other commodities and indices | 10:1 |
| Individual shares | 5:1 |
| Crypto-assets | 2:1 |
Source: ESMA, "ESMA adopts final product intervention measures on CFDs and binary options" (esma.europa.eu, 2018). Limits differ by country and change over time, and brokers outside these rules offer higher ratios. Check your regulator's current rules. Do not read a high maximum as a target.
A sensible way to think about it
Work out how much you are willing to lose, set the stop at a level, size the trade, and only then look at margin. If the margin is a large share of your account, the position is bigger than the account can comfortably hold, whatever the leverage says. See what is a lot for the size side. Leveraged trading can lose more than your deposit in some markets. Education only, not advice.
Try it with your own numbers
Free calculators that do the math for you. No signup, and nothing leaves your browser.
Pre-set for the market you trade
Pip, point and tick values differ by instrument. These calculators start from each one's contract, with worked examples:
Quick questions
Does higher leverage mean higher risk?
Not by itself. Risk comes from position size and stop distance. Higher leverage makes a larger position possible, which is where the danger lies.
What is margin?
The part of your account held as a deposit for an open leveraged position. It is not a fee.
What is a margin call?
A request, or an automatic close-out, when equity falls too low for the margin held. The level varies by broker.
What leverage should a beginner use?
Choose position size from the amount you can afford to lose and a stop at a real level. The leverage ratio then matters little.
Keep the stop at a level.
These indicators help you find levels worth placing a stop beyond.
Premium indicators come with a 7-day free trial on request: how the trial works.
Keep reading
Last updated November 2026. For education only. Not financial advice.