Best Leverage in Trading: How to Choose the Right Level

Leverage is essential for trading many stock market assets. Leverage in trading lets you significantly increase your buying power on each transaction, and with it your potential profits. But what level of leverage should you choose? What is the best leverage for stock market CFD & trading? You’ll find all the answers, and much more, in this article.

What Is the Best Leverage for Stock Market, CFD & Trading in 2026?

We have trading accounts with several brokers, and here is our list of the best leverage brokers for retail traders:

Leverage in Trading & Financial Leverage – Definition

Put simply, leverage in trading is a multiplier applied to your own funds when you trade on the financial markets. In the stock market, leverage is the ratio between the amount invested and your equity. Understanding leverage matters because it allows you to invest more than the money you actually have available.

If you have leverage of 10, or 1:10, you can multiply your capital by 10 on a trade: you can place an order worth €1,000 while committing only €100 (your €100 is multiplied by 10 and becomes €1,000).

CFD Leverage – A Detailed Explanation

CFDs are almost always traded with leverage. The reason is that their underlying assets often don’t move dramatically within a day or over very short periods. To profit from the small price changes that do occur, you need to trade CFDs on these assets with large sums or large volumes, which is where leverage comes in. It considerably increases the trader’s or investor’s capital on each transaction, so that a small price move can generate substantial gains (or losses, if the market moves against the investor).

Calculating Leverage in the Stock Market – Formula & Simple Example

How do you calculate leverage in trading?
Leverage = Amount Invested in the Market / Your Equity
In trading, leverage is the ratio between the amount you invest in the market and your own funds. For example:

• Capital in your trading account = €1,000
• Investment through your trading account = €10,000
• Your leverage = 10

If you invest €10,000 in Apple shares and have €1,000 of your own funds in your trading account (shown as Equity in MetaTrader), your leverage is 10: the €10,000 invested in the market divided by your equity.

Pros and Cons of Leverage in Trading

Why Is CFD Leverage So Popular? The Advantages

• Leverage lets you invest more than your capital, and CFD leverage is usually much higher than on other derivatives (futures, options, warrants)
• High leverage means experienced traders don’t have to tie up much margin on their positions
• Some trading or purely speculative strategies (such as the carry trade or the martingale) don’t work with very low leverage or without any leverage
• Leverage allows even people with small capital to invest in markets that would otherwise be out of reach
• It multiplies your stock market gains (and, on the downside, your losses)
• It increases the capital you have invested in the financial markets

Why Can Leverage Be Risky? The Disadvantages

• When you use it, leverage increases the size of your investment, so both your potential loss and your potential gain can increase too
• Very high leverage is not recommended for beginners, because a simple mistake in a trading account can have disastrous consequences.
• If your account has no negative balance protection, you can end up owing money to your broker. If you hold a large position and the market moves sharply all at once, or gaps, your losing position will be closed on a margin call, with losses greater than your capital. As a reminder, in Europe, clients trading with ESMA-regulated brokers have mandatory negative balance protection and cannot lose more than their initial capital.

Warren Buffett & the Stock Market Multiplier – Which Advice to Follow?

• If you are a beginner, don’t look for very high leverage right from the start

• Test the leverage you want to use for live trading on a demo account first

• Make sure you fully understand the contract sizes you are buying, margin, swaps and margin calls

• Keep enough funds in your trading account: even if your leverage is high and you are not using much margin, you need enough money set aside to cope with the market’s natural volatility.

• Be disciplined in your trading
• Know all the types of stock market orders so you can manage your leverage properly

Does Leverage Vary Depending on the Trading Platform?

No. Leverage depends on the broker you use and how it is regulated. If your broker is regulated in Europe under ESMA rules, its leverage will not exceed 1:30, whichever trading platform you use with that broker.

What Is the Best Stock Market Leverage?

The best stock market leverage is the one that matches your level of experience in trading or investing.

• Beginner investor: you can start with maximum leverage of 1:30 to limit your trading losses and stop beginner mistakes from having too great an impact on your equity. At first, use a stop loss so you don’t make costly errors with your positions, and make sure you master the basics of trading for beginners.

• Intermediate investor: if you have been trading with real money for a while and already understand the basics of leverage, you can use leverage of up to 1:200.
• Experienced investor: you have been trading for some time, you know how to manage your positions, you apply effective money management and you monitor your trades – you can try higher leverage.

Trust AMF-Regulated Leverage!

Is this even a question? The most heavily regulated brokers are the safest. With regulated brokers, you won’t find incredibly high leverage. In France, the AMF caps leverage according to the financial product.

• CFDs on FOREX:
  • AMF leverage → 1:30
• CFDs on Stocks:
  • AMF leverage → 1:5
• Finally, CFDs on Cryptocurrencies:
  • AMF leverage → 1:2

These are the maximum leverage levels available for trading CFD contracts. If a broker is regulated by the AMF, it must comply with these rules.
In addition, an AMF-regulated broker will never offer binary options.
Often misunderstood by investors, binary options give traders an unfair chance of winning. In terms of probability, the odds of making money are extremely slim.

• FOREX: Maximum AMF Leverage

x 30
In the AMF’s view, FOREX falls into two categories: major currencies and minor currencies.
On major currencies, the AMF allows leverage of up to 30. These currencies are very stable because they represent very stable economies – for example the United States with the dollar, the European Union with the euro, or the United Kingdom with the pound sterling. These countries have very solid economies built on powerful companies, strong markets and wealthy populations.

These factors reduce currency volatility. The dollar and the euro, for example, are the currencies that banks and investment funds hold in their reserves.

Conversely, so-called minor currencies belong to emerging or developing economies. These countries are more fragile, and their sovereign currencies are more likely to experience sharp spikes in volatility. Examples include the Turkish lira and the Venezuelan bolívar. These two currencies gained 66% and 6,700% respectively in 2020. On markets this volatile, the AMF considers leverage of 30 too high. For minor currencies, AMF leverage is capped at 1:20.

• Stocks: Highest AMF Leverage

x 5
Stocks are a slightly less “risky” market than FOREX, meaning people lose less money there. Yet AMF leverage is lower – why?

Because FOREX lots contain 100,000 units of currency: $100,000 for one lot of USDEUR, or €100,000 for one lot of EURUSD. In this context, leverage doesn’t just increase volatility and traders’ potential gains. It is a tool that increases investors’ capital and allows them to trade financial products as large as FOREX lots.

What’s more, volatility is higher on the stock market than on FOREX. However, it is a market that ordinary investors understand much better than foreign exchange.

Shares, on the other hand, cost anywhere from a few cents to several thousand euros for the most expensive ones, such as Amazon or Alphabet, Google’s parent company. On this market, you therefore need less of your own money to open a position. The maximum AMF leverage is thus there to increase volatility and buying power modestly and, above all, in a very safe way.

• Crypto-Assets: Highest AMF Leverage

x 2
Cryptocurrencies are famous for their historically high volatility. Some even call it the most volatile market of all, compared with stocks and currencies. That is why the AMF has limited the leverage allowed for the brokers it regulates to 1:2. This may seem low, but amplifying the volatility of your crypto positions isn’t necessarily useful. Looking at how this market has evolved over a year, we see a rise of 700%.

You’ll notice this is lower than the rise of the Venezuelan bolívar. But remember that FOREX lots contain 100,000 units, whereas you are free to buy a single cryptocurrency, or even fractions of one. Crypto-assets are divisible up to 7 decimal places, which makes them accessible to every portfolio size.

AMF Leverage on FUTURES

• Maximum leverage:
  • x 20

AMF Leverage on Binary Options

• Trading this product is banned by the AMF in France.

Which Leverage Levels Does the AMF Advise Against in France?

• Above 30 on FOREX CFDs
• Above 5 on Stock CFDs
• No more than 2 on Crypto-Asset CFDs
• A maximum of 20 on Futures

How to Lower Your Leverage in Trading

If, for whatever reason, you want to reduce the leverage you use, you have several options depending on how your broker works:

• Simply choose lower leverage when you open your next positions or place your next orders. This works with brokers that let clients set their leverage for each position or order.
• Go to your account settings and select lower leverage in the leverage section. This applies to brokers that set one leverage level for the trader’s or investor’s entire account, so every transaction uses that level (leverage cannot be changed trade by trade). To change it, you need to change the account leverage in the settings.

Can Leverage Put You in Debt?

• No – if you use a European broker with a retail account. If your account ever goes negative, the regulator requires the broker to cover retail clients’ negative balances under negative balance protection rules.
• Yes – if you trade with a non-ESMA broker. Outside Europe, regulators do not require brokers to cover clients’ negative balances, so you could end up owing money to your broker. Some trustworthy brokers have introduced negative balance protection even for clients of their offshore entities (Australia, for example).

How Does Leverage Affect Gains & Losses?

Leverage is neutral in terms of its impact on gains and losses. If you use higher leverage, you increase both your potential gains and your potential losses, because you are actually investing more in the market. Leverage itself does not change your trading strategy.

It is worth noting, however, that using leverage requires closer monitoring of your trading account: you are investing more, so price movements on the financial markets have a bigger impact on your equity.

Leverage also requires good money management, i.e. sound management of your trading account: you need to monitor your account more closely, set stop losses if you leave positions unattended, and have a well-defined trading plan. Generally, if you are investing for the first time, start with lower leverage or at least try a demo trading account.

Can You Make Money with Leverage?

Yes. Many successful investors use leverage in their trading strategies. That doesn’t mean they win only because of leverage: it is one element of their trading strategy, not the only one.

In 2014, the French financial markets regulator, the AMF, published statistics on the losses of CFD brokers’ clients and concluded that leverage generates losses. In reality, after the European regulator ESMA introduced leverage limits in Europe, the proportion of clients losing money did not necessarily fall.

This clearly shows that leverage alone doesn’t generate losses – the trader’s overall investment strategy does. A good strategy includes sound fundamental and technical analysis, knowledge of the trading platform, money management, risk management, a trading plan and leverage.

What Are the Types of Leverage?

There are several types of leverage depending on the field:

• Stock market leverage (or stock market multiplier): the ratio between the amount invested in the market and your equity
• Financial leverage (in companies) : using debt to increase a company’s return on equity
• Real estate leverage: without realizing it, anyone who buys an apartment or a house with a mortgage is using leverage; you borrow money to invest in property. Leverage has a multiplier effect on your investments.

Depending on the amount of leverage, the levels most commonly offered by brokers are:

• 1:2
• 1:5
• 1:10
• 1:20
• 1:50
• 1:100
• 1:200
• 1:400
• 1:500
• 1:800
• 1:1000, etc.

Note that, depending on the size of your account, brokers may change your leverage. In general, a broker will limit leverage on very large accounts. Why? Because it is difficult for the broker to manage a large client’s position in the market. A large client might be someone with more than €500,000 in their account, or someone trading position sizes of more than 100 million in the market, leverage included.
In trading, we also distinguish between several kinds of leverage:

• Maximum leverage – the leverage set in your trading account settings. If you have 1:500 leverage, for example, your maximum leverage is 500, meaning you can invest 500 times your initial stake. You are at maximum leverage when you are using 100% of your margin.

• Effective leverage – effective leverage changes constantly while you have an open position in the market. It equals: Amount Invested / Your Equity.
  • Profit example: If you have an open position of €10,000 in the market and a balance of €1,000 => your leverage is 10,000 / 1,000 = 10. If the same position starts making a profit, say €500, your equity becomes 1,500, so your leverage will be: 10,000 / 1,500 = 6.67
  • Loss example: If you have an open position of €10,000 in the market and a balance of €1,000 => your leverage is 10,000 / 1,000 = 10. If the same position starts making a loss, say €500, your equity becomes 500, so your leverage will be: 10,000 / 500 = 20

• Zero leverage – when you have no open positions, you have no leverage. Likewise, when your account holds all the funds needed to open a position, you have no leverage either. For example, if you invest €100,000 in an EURUSD contract worth €100,000 and you have 100,000 in your trading account, you are not using leverage.
• Negative leverage – this does not exist.

Which Products Are Leveraged?

The most commonly used leveraged products are derivatives, such as:

• CFDs (on stocks, currencies, cryptocurrencies, commodities, etc.)
• Warrants
• Turbos
• Futures
• Options
• The SRD (Service de Règlement Différé, the French deferred settlement service)

What Is the Maximum Leverage per Market?

The ESMA limits per market in Europe are:

• 1:30 (3.33% margin) for major Forex pairs (major currency pairs are combinations of USD, CAD, EUR, GBP, CHF and JPY)
• 1:20 (5% margin) for the most liquid index CFDs (ASX200, DAX30, DJI30, FTSE100, NQ100, SP500), minor Forex pairs (pairs not listed above), exotic pairs and gold
• 1:10 (10% margin) for other commodity CFDs, excluding gold
• 1:5 (20% margin) for stock CFDs

• Forex – Major Pairs
• Major Stock Indices, Minor & Exotic Forex Pairs & Gold
• Other Commodity CFDs (Excluding Gold)
• Stock Market Leverage – Equities

Forex – Major Pairs

• 1:30 for retail clients in Europe
• 1:500 for clients classified as professional in Europe
• up to 1:500 with brokers not subject to ESMA regulation (outside Europe)

Leverage is the very foundation of forex trading. Forex is the global currency market, and forex contracts are standardized at 100,000 units of the base currency:

• 1 lot of EURUSD = €100,000
• 1 contract of GBPUSD = £100,000
• 1 lot of USDJPY = $100,000

In reality, few retail traders – or even professionals – hold the full amount traded on the currency market. The currency market, commonly known as FOREX, is the most traded market in the world, and its daily moves are fairly small in money terms if you trade small amounts, for example 10,000 (= 0.1 lot) or €20,000 (= 0.2 lot).

Major Stock Indices, Minor & Exotic Forex Pairs & Gold

• 1:20 for retail clients in Europe
• 1:500 for clients classified as professional in Europe
• up to 1:500 with brokers not subject to ESMA regulation (outside Europe)

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Other Commodity CFDs (Excluding Gold)

• 1:10 for retail clients in Europe
• 1:500 for clients classified as professional in Europe
• up to 1:500 with brokers not subject to ESMA regulation (outside Europe)

Stock Market Leverage – Equities

• 1:5 for retail clients in Europe
• 1:500 for clients classified as professional in Europe
• up to 1:500 with brokers not subject to ESMA regulation (outside Europe)

Stock market leverage works the same way as CFD leverage and leverage on trading accounts. Depending on the liquidity of the stock in question, leverage on stock CFDs can range from 5 to 10.

• You trade with an Australian broker and your maximum leverage is 500

• You invest in Facebook shares, and your broker’s leverage on this stock CFD is 5

• Your leverage on the Facebook investment will necessarily be 5, because that is the maximum leverage your online broker offers on this stock

Some brokers offer very high leverage of up to 1000. Never forget: leverage increases your gains, but also your losses. Choose the leverage that suits you best.

Is It Possible to Trade Without Leverage?

Yes, you can trade without leverage if you have the full amount you want to invest in a trade on the financial markets. For example, if you want to open a €100,000 position on EURUSD, you need €100,000 in your account.

Investing through a securities account is done without leverage and without additional fees (depending on the broker). In a CFD account, swap fees apply even if you don’t use leverage. And don’t assume that trading without leverage has no drawbacks:

• you can’t access every market
• some investors simply cannot invest because of the large contract sizes
• moves are much slower (more aggressive traders won’t be able to trade without leverage)

Trading Margin: What Impact?

Leverage and margin are two basic concepts in online trading. Margin is the minimum amount required to open a position.

What Is the Relationship Between Margin and Leverage?

• The higher the leverage => the smaller the trading margin

• The lower the leverage => the more margin you need in your trading account

What Is the Relationship Between Leverage and Margin Calls?

• The higher the leverage => the later a margin call will occur

• The lower the leverage => the sooner a margin call will occur, and the greater the risk of having your positions closed on a margin call.

The margin call is the margin percentage at which the broker closes your losing positions (generally 30% or 50%). If your leverage is high, your required margin is small, so the margin call will occur later.

Example: Margin, Margin Call & Leverage

With Low Leverage:

• Your capital = €5,000

• Your leverage = 1:30

• Open position in the market = €150,000

• Required margin = Amount invested in the market / Maximum leverage = 150,000 / 30 = €5,000

• Broker margin call at 30% of margin => the margin call will occur when 30% * €5,000 = €1,500 remains in the trading account

With High Leverage:

• Your capital = €5,000

• Your leverage = 1:500

• Open position in the market = €150,000

• Required margin = Amount invested in the market / Maximum leverage = 150,000 / 500 = €300

• Broker margin call at 30% of margin => the margin call will occur when 30% * €300 = €90 remains in the trading account

As the example above shows, leverage has a direct impact on the margin your broker requires on your positions and on the margin call level.

That is why experienced traders look for high leverage:

• they know how to manage their risk

• they don’t leave positions unmonitored or without a stop loss

• high leverage lets them trade much larger amounts in the market with a small sum
• the margin call only comes right at the end, when the trader has very little capital left in the account – so they don’t get closed out unnecessarily on a margin call when the market might turn around again.

ESMA Leverage

ESMA leverage is the leverage that applies in Europe to brokers’ retail clients. Important! This leverage does not depend on where you live. The 1:30 cap applies to brokers regulated in Europe, whether they are based in France, Luxembourg, Spain or Cyprus. Even if you are a non-European client, as long as you open a trading account with a European broker subject to ESMA regulation, you are limited to leverage of 30.

1:30 Leverage – A Good Thing?

In 2018, the European regulator set out to limit the losses of brokers’ retail clients. It considered that these losses were caused by the very high leverage European brokers offered at the time. That is why ESMA regulation banned leverage above 30 for retail clients while keeping higher leverage available to more experienced clients.

1:500 Leverage in Europe – Is It Possible?

ESMA regulation allows European brokers to offer higher leverage to clients with trading experience. This category is known as Professional Clients. Note: this doesn’t refer to companies, but to individual clients who want 1:500 leverage and meet the trading experience requirements to qualify as professionals.

Examples of Brokers with 1:30 Leverage

• ActivTrades
• Etoro
• XTB
• FXMC
• FXPRO

Brokers with Leverage Above 1:30

• Vantage PTY (Australia)
• AvaTrade PTY (Australia)
• Swissquote (Switzerland)

How to Get Professional Client Status with a Broker Regulated in Europe

When you apply to open an account, request professional account status (you can also do this later). The broker will then ask you for documents before granting this status. Brokers won’t give you professional status without the requested documents, simply because they are regulated companies supervised by their regulators (for example the FCA in the UK, the AMF in France or CySEC in Cyprus).

Here is what you need to demonstrate:

• trading knowledge (for example a proprietary trader’s CV, a finance degree or an employment certificate from a financial institution)
• at least €500,000 in capital (in a bank account or invested in financial instruments)

• trading of at least €20,000 in the markets (leverage included) in each of the last 4 quarters.

Important! Only 2 of the 3 conditions need to be met: for example, if you don’t have €500,000 in equity but you have trading account statements covering at least one year and a proprietary trader’s CV, you can apply for – and even obtain – professional client status.

How to Increase Leverage in Trading

• Set higher leverage when configuring your order.
• Go to your account settings and choose higher leverage for that account.
• Switch from a retail account to a professional account to benefit from the higher leverage available to professional traders and investors.

Maximum leverage is set by your broker. Brokers regulated in Europe must comply with ESMA regulation and cannot offer retail clients leverage above 30. They can offer 1:500 leverage to clients classified as professionals who can prove they have enough trading experience.

How to Choose the Right Leverage

To decide which leverage to choose, consider the following:

• The market you want to invest in: the smaller a market’s moves, the more leverage you need to make the time spent in front of your screen managing your trades worthwhile.
  • On the Forex market, for example, leverage is very high because Forex pairs move fairly little, so leverage of up to 1:500 can be managed.
  • On index CFDs, the leverage needed may be somewhat lower, because the market tends to move more than currencies. Leverage of 1:200 can be acceptable
  • On stocks, leverage is lower (already because of the maximum leverage brokers offer), so 1:10 or 1:5 is acceptable

• The liquidity of the market you want to invest in: the more liquid a market, the easier it is to enter and exit trades. On very liquid markets you can take on a little more leverage than on illiquid ones.
  • Liquid markets where you can take a bit more leverage: forex, indices, gold, oil
  • Less liquid markets, where you need to be careful with leverage and not go beyond 1:30: stock CFDs and commodities other than gold or oil.
• Your investment time horizon: the longer you want to hold a position, the lower your leverage should be. If you trade very short term – scalping over a few minutes or day trading – you can indeed use higher leverage.

Leverage Above 30, or Non-ESMA Leverage

Retail traders who don’t want to be limited to leverage of 30 and who can’t meet the conditions for professional status have other options.

After the 1:30 leverage cap was introduced in Europe, many investors opened trading accounts with brokers regulated outside Europe. The natural choice was brokers regulated in Australia by ASIC.

Why Australia? Because it has sound regulation and good protection of client funds. Even though investor protection isn’t quite as strong as in the United Kingdom, for example, and dealing with a distant country can be harder, Australia has emerged as a good compromise between fund protection, serious regulation and the leverage on offer.

Which brokers? Very few European brokers are also regulated in Australia. One example is Vantage, an Australian broker that has started offering its services to European clients (the only downside is that customer service is in English).

Have you already used leverage in your trading? Share your experience with the community in the comments!