1:500 Leverage: The Complete Guide 2026

1:500 leverage is a weapon of mass destruction in trading. With that much firepower, you can get rich or sink your account. Want to know how to use 500x leverage more effectively? Here is our complete guide.

1:500 Leverage: How Does It Work?

1:500 leverage multiplies your buying power by 500. Thanks to leverage, you do not have to pay the full price to open a position. Instead, you only put up a margin, and the rest is lent by your broker, who therefore shares the risk with you. Besides bigger profits, you can open more positions with the same capital.

To understand leverage, it is essential to know why you would use it. Leverage is a way to increase your gains, but also your losses. The risks and rewards of leveraged trading therefore depend on you. If your trades are successful, leverage in trading will be a formidable weapon for you. If, on the other hand, you cannot make winning trades, leverage will finish you off.

To go further, also read our guides “XM leverage” and “Vantage leverage”.

How to Use 1:500 Leverage with MetaTrader

MetaTrader (MT4 or MT5, depending on the version) is an online platform that is very popular with traders. It lets you view price charts and carry out technical analysis. But MetaTrader is best known for being compatible with a large number of brokers.

In addition, when your broker allows high leverage, you can use it directly in MetaTrader through the trading interface. It is a setting you need to define when you place your order, and it cannot be changed while your position is open.

Pros and Cons of Trading with 1:500 Leverage

1:500 leverage is a tool that must be used with great caution. With 500x leverage, you can take a position on a €100,000 forex lot with just €200:

500 × €200 = €100,000

If your position gains 1%, you make 1% on €100,000.

1% of €100,000 is €1,000.

But if your position loses 1%, you will have lost 1% × €100,000 = €1,000.

So with a move of just 1%, you can make 5 times your stake. And all with an investment of only €200.

What Are the Advantages of Leverage?

Why does trading with 1:500 leverage give you a considerable edge over other traders? The reason is simple: 500x leverage lets you increase your profits dramatically relative to your actual capital. A trader without leverage is limited by their funds, and their capital grows linearly. With leverage, your capital grows exponentially.

With 1:500 leverage, you can:

open bigger positions with the same capital

split your trading balance into small portions and invest each portion with 500x leverage.

By doing this, you can not only increase your gains on each position, but also trade different assets and diversify your portfolio

Best CFD Broker

What Are the Risks of Leveraged Trading?

If your losses are large, you can end up in debt to your trading platform. In other words, the margin you paid to open the position is not enough to cover your losses.

This debt is what makes leverage particularly risky. Investment risk is the potential loss you can suffer on your money. Without leverage, the investments considered risky are those with high volatility, or investments in companies that could collapse and go bankrupt. That is the case, for example, for 99% of start-ups.

However, risk is always proportional to reward. The 1% of start-ups that succeed deliver gargantuan returns on investment.
Leverage therefore carries more risk than traditional investments. With a start-up, your capital can fall to 0; in trading with 1:500 leverage, your capital can fall below 0. In other words, you have nothing left and you owe money.
Be aware that more than 70% of traders lose money with leverage. And this statistic holds for amateurs and professionals alike.

Example of a Trade with This Much Leverage

You put up €200 and open a €100,000 position.

You have therefore paid 0.2% of the position’s value up front. This is called 0.2% margin.

The broker tops up your position with the remaining €99,800. It is a €99,800 loan, but one that is meant to last a handful of hours, or a few days at most.

As with any loan, you have to pay interest. With a broker, this interest takes the form of position fees. As long as your trade is open, and as long as you have not repaid your loan, you pay fees.

Your position can win or lose; that depends on you and your skills as a trader.

Once the gains are large enough, or the losses too large, you close your trade. This is also called closing your position.

At that point, you give the money back to the broker and keep the profits you made. If you made a loss, on the other hand, you have to pay the difference to your broker.

How to Reduce the Risks of 1:500 Leverage

There are several techniques for limiting risk with 500x leverage. You might be told that you need to be a good trader, always be right and never pick the wrong position. But that is not true. Even the best traders get about 30% of their trades wrong. And we are talking about traders at major banks such as Goldman Sachs or Société Générale.

How to Reduce Leverage Risk with Money Management

Money management is a strategy for managing your money. You need to use stop losses to limit your losses and take profits to lock in your gains.

A stop loss is an automatic order that protects you if a trade goes against you.

Say you set a stop loss at a 0.1% loss. This means that if the market drops 0.1%, your position will be closed. That way, you limit your loss to 0.1%.

For a trade with €200 and 1:500 leverage, a 0.1% loss amounts to €100. With a stop loss, you can therefore avoid losing all your capital, or worse, ending up in debt to your forex broker.

The second type of automatic order is called a take profit. The idea is the same: it is an order set in advance that will be triggered automatically if the price reaches a certain level.

The purpose of a take profit is the opposite of a stop loss. When your position has made enough money, it is closed to secure the gains.

If you set a take profit at a 1% gain, then as soon as your position has returned 1%, it will be closed to bank the profits.

Example of a Money Management Strategy

Let’s go back to the initial position: €200 with 500x leverage.

This position is worth €100,000.

With a stop loss at 0.1% and a take profit at 1%, you make sure your position can lose at most €100 and gain €1,000. That gives you a 1:10 risk/reward ratio.

This is what is known as a money management strategy.

Other rules can be added to this strategy, for example never opening positions with more than 2% of your capital.

By combining these safeguards, trading with high leverage becomes not only less dangerous but also much more profitable. Instead of battling your emotions, you trade like a machine. And emotions are a trader’s worst enemy.

Leveraged positions can be protected through money management and diversification.

When Should You Use 1:500 Leverage?

Brokers that offer 1:500 leverage are a specific kind of broker. For example, 500x leverage cannot be used in the stock market. Leverage above 100 is used to amplify gains on positions with low volatility.

Volatility refers to the size of price movements. If an asset’s price rises 10% every day, its volatility is high. If, on the other hand, it moves in 0.01% increments, its volatility is low.

On the forex market, volatility is low. Moves in forex rarely exceed 0.1% in a single day. And that makes sense! Just imagine the effect on the global economy if the dollar lost 10% of its value every day!

So you need to turn to brokers specializing in forex trading to access leverage of up to 500, which is reserved for the boldest traders. To find out, simply check the maximum leverage allowed to see whether the broker offers 1:500 leverage.

1:500 Leverage with CFDs

Another type of market is directly affected by high leverage such as 1:500: commodities.

Oil, for example, is not traded by the unit on financial markets. What you need to understand is that by trading with leverage, you are playing in the big leagues. Investment funds, banks and major financial centers do not do things by halves. The price of a seat at the table with the big banks and big traders is high.

For example, when you look at the price of oil, you see a price of around $70 a barrel. But if you want to invest, you cannot invest in a single barrel. On the markets, oil is traded in lots of 100 barrels. So it takes at least $7,000 to trade oil. Under these conditions, trading and lucrative investments would be reserved for the big players, the giants of finance.

This is the context in which leverage should be seen. It democratizes finance and opens speculation up to small budgets.

How to Build Your Trading Plan with 1:500 Leverage

1:500 leverage is a performance tool and a weapon for every trader. But before mastering its power, you need to start with the basics. First and foremost, you need to know how to calculate leverage in order to build your trading plan.

Leverage should not be used lightly or without a trading strategy. When you set up your trading strategy, you need to determine:

your starting stake

your leverage, in this case 500

your profit target

your maximum loss limit

the maximum time your trade will stay open.

Case 1

Starting stake: €100

Price move: 1% gain

Leverage: 500

With 500x leverage on a €100 position, the actual value of your position is €50,000.

The 1% move therefore applies to the full €50,000.

1% × €50,000 = €500.

A 1% gain on a €100 position with 500x leverage therefore means a €500 profit.

Case 2

Starting stake: €100

Position move: 1% loss

Leverage: 500

Conversely, with a 1% loss on the same position:

The 1% always applies to the total value of your position. So it is 1% of €50,000, or €500.

A 1% negative move on a €100 position will therefore cost you €500, or 5 times your starting stake. You would face a margin call immediately!

Case 3

Starting stake: €200

Position move: 1% gain

Leverage: 100

When you open a €200 position with 100x leverage, your position is worth €20,000. That is a smaller position than if you had used 500x leverage with a €100 stake.

1% of €20,000 is €200.

A 1% gain on this position is therefore equivalent to a 100% increase in your capital.

You put in €200 and you make €200.

With a 1% loss, the calculation is the same. The move applies to your €20,000 lot. The loss will be €200, which is your starting stake.
So with 100x leverage, the risks are moderate. You cannot get a margin call in this scenario.

Case 4

Starting stake: €1,000

Price move: 1%

Leverage: none

Now let’s look at the effect on your trading portfolio when you use no leverage.

You have a €1,000 stake and you trade a market such as forex.

With no leverage, you are said to have leverage of 1. The total value of your position is therefore one times €1,000, or simply €1,000. This calculation step is unnecessary, but it helps you understand how leverage works.

With a 1% move, you make a 1% × €1,000 gain, or €10.

In the opposite direction, you lose €10.
These examples show the impact of leverage on your portfolio. Depending on your risk tolerance, you will find one situation or the other more attractive. For example, if you want to limit your losses as much as possible, the fact that 1x leverage cannot make you lose more than 1% of your starting stake may seem very appealing. Without leverage, you will never get a margin call.

For traders with a high risk tolerance and a strong appetite for profit, it is the opposite: being able to make €1,000 with a €100 stake, in a low-volatility environment. That is the real power of 500x leverage.

Can You Trade Without High Leverage?

1:500 leverage is not suited to every market. Some financial markets are highly volatile, and leverage is less necessary there. But in markets with low volatility, or with large lot sizes, you will not be able to trade without high leverage, in the order of 200, 500 or 1,000.

Forex is a market with very low volatility, meaning that price moves in this market average 0.1%. With volatility that low, the gains you make without leverage will be small or even non-existent.

The point of leverage is to increase your percentage gains.

If you make a 1% gain on a €200 position, you earn €2.

Your portfolio moves by the same amount as your position.

If you make a 1% gain on a €200 position with 500x leverage, you earn €2 × 500 = €1,000.
So you make a 500% gain, or 500 times the move in your position.
In addition, standard forex lots are 100,000 units. If you do not have €100,000 in your account, you cannot trade these markets without leverage. With 500x leverage, €200 is enough to open a position worth €100,000.

How to Choose the Right Leverage

1:500 leverage is reserved for calm markets. But there are as many leverage levels as there are investors! For markets ranging from the most balanced to the wildest, a wide range of leverage is available. If you use no leverage, you are using a factor of 1. So trading without leverage means trading with 1x leverage.

Then, the lower the volatility of your investment, the more you will need to use leverage.

Leverage of 2, 5 and 10: these levels are recommended for stocks. You can also use them with CFDs on underlyings that are not too expensive, i.e. lots you could already buy with your starting stake. For example, if a share costs €5, you do not need high leverage to trade it.

Leverage of 20, 25, 50 and 80: these levels start to carry real weight. They are used by experienced or even expert traders. They are substantial for trading stocks, but still too low for a market such as forex. Depending on your trading strategy, though, you may need them.

Leverage of 100, 200 and 500: these levels amplify the volatility of the most stable markets. They also let you open positions on large lots, such as CFDs on forex and oil. This leverage is not to be taken lightly. If you are used to the volatility of stocks, you may think you can handle big swings.

What Is Different When You Trade with High Leverage?
Leverage with CFDs
Can You Use Leverage in the Stock Market?

What Is Different When You Trade with High Leverage?

Between trading with 1:500 leverage and buying shares over the counter, the difference is margin. In leveraged trading, you have to put up margin to open your position. This margin guarantees your solvency. If your position’s losses exceed your margin, your broker no longer considers you solvent. In that case, either you add margin to your trading account or your broker closes your position.

This is called a margin call.

In an over-the-counter market, you do not pay margin. Instead, you pay the full price of the share. But after that, the share belongs to you. The principle of trading CFDs and forex is that you do not buy the underlying asset. You are simply betting on how its price will move.

Leverage with CFDs

CFDs are a type of financial product. To trade forex, you have to go through CFDs. Forex is currencies, like the euros in your pocket. To trade forex, you have to trade “lots” of several thousand units: 100,000, to be precise.

That is what large financial groups such as investment funds and banks do. If you want to trade this type of market, you need funds of several hundred thousand euros. Obviously, that rules out small investors. This is where leverage and CFD contracts come in.

With CFDs, brokers let you bet on an underlying asset rising or falling, such as the euro or oil. And you do not need to buy the underlying.

For example, forex is traded in lots of 100,000 units. As the underlying asset is the euro, you would have to invest in lots of €100,000. But with CFDs, you do not need to buy 100,000 units. You can open a bet on the asset’s price going up or down. If the price moves in your favor, you bank the gains and can close your position. And all without ever having to buy 100,000 euros. You simply opened a trade, also called a position. And you only have to pay the fees, which are like the interest on a loan.

CFDs with leverage between 100 and 500 are the only way for small investors to trade forex.

Can You Use Leverage in the Stock Market?

1:500 leverage is not really recommended for stock market investors. Or at least, leverage in the stock market must be used with caution. Stock markets are considered volatile by investors and regulators, meaning that the assets traded there, i.e. shares, can see large price swings. In this type of market, leverage is capped for retail investors in order to protect them. But it is not just about protection. As we have seen, leverage is not meant for gambling or doing anything you like. It is simply a way to artificially increase the volatility of a market or an asset. It is therefore unnecessary in markets that are already highly volatile.

Forex: The Only Market for 1:500 Leverage?

To make better use of 1:500 leverage, it is also important to understand forex leverage. Forex is one of the most popular markets for 500x leverage. It is one of the only markets with this kind of extraordinary amplifier, for the following reasons:

very low volatility

very large lot sizes

a market originally designed for investment funds and central banks.

Final Word

Leverage of up to 500 is a real combat weapon. In inexperienced hands, it can lead to disaster. That is one of the reasons why it is recommended to use trading platforms in demo mode, with test accounts, before you start trading with real money.

If you are still a beginner, there are quality courses and demo accounts for practicing safely, for example with 1:100 leverage. And if you are a seasoned trader, you can start trading with substantial leverage, and why not 1:500 leverage.

Need advice on whether 1:500 leverage is right for you? Leave us a comment and we will help you find the broker with the best leverage for you!