Which Leverage Should You Choose in Trading?

Which leverage should you choose? 1:2? 1:10? 1:50? 1:100? 1:500? 1:1,000? Or more than 1:1,000? Whatever you decide, your choice should always be justified, because the leverage you use on a trade or an account should not be chosen on instinct or at random. In this guide, you will learn which leverage to choose based on several criteria, and what the best leverage for trading looks like in practice.

Which Leverage Should You Choose as a Beginner?

Many beginner traders want to understand and use leverage to multiply their gains while investing small amounts in their positions. It is an attractive strategy, but you need to know how to go about it and stay cautious.

The first step to knowing which leverage to choose as a beginner is to master the key concepts of trading leverage, including leverage, margin, margin call, stop loss, stop out, etc.

The second step to finding the best leverage for beginners is to practise in demo mode, so you can see in practice how leveraged trading works, its advantages, its risks, etc.

Once they have mastered what leverage is and how it works in practice, beginners can open a live leveraged trading account and start trading.
The key takeaway is that beginner traders are better off starting with low leverage.
In practice, a beginner trader should not go above 1:10 leverage. So you can trade with leverage of 1:2, 1:5 or even 1:10.

Using low leverage has the advantage of letting beginners learn for longer in live conditions. With small or medium capital, you run less risk of losing it when you use low leverage, which lets you use your capital for longer or across many positions.

In any case, even if you are a beginner who understands leverage and how it works, increase your leverage gradually; do not start straight away with 1:500 leverage, for example. The results of your trades could either discourage you immediately or make you more enthusiastic than you should be. Either way, you risk giving up leveraged trading very quickly, even though this style of trading is simple and rewarding over time. The beginning can be difficult, but with time and experience you can make impressive profits.

On related topics, our articles “SimpleFX Review 2026” and “Trader Mindset” complement this guide well.

What Leverage Do Professional Traders Use?

Professional traders certainly have the possibility (from a regulatory point of view) and the ability (in terms of skills and experience) to use the highest levels of leverage. But in practice, they do not always use maximum leverage.

Professional traders working for large financial institutions (banks, brokers, funds, etc.) generally tend to use low leverage. There are several reasons for this: low leverage avoids overexposing the money of the clients they manage, which helps them retain clients and attract new ones; low leverage also allows them to make rational rather than emotional trading decisions.

On this last point, beginner and intermediate traders often make overly emotional decisions when trading with leverage. They think too much about the likely results and sometimes want to intervene in or manage their trades too much.
Professional traders tend to use really high leverage only when they are highly confident about a trade.
So one of the keys to knowing which leverage to choose and how to use leverage like a pro is to master the market. When you are confident and have done the right analysis, you can opt for leverage of 1:200 or even 1:1,000. It is therefore essential to master the market or instruments you invest in.

In addition, other professional or experienced traders who do not work for a financial institution almost always trade with high leverage. Almost every position they open comes with high leverage, from 1:100 to 1:1,000 or more, depending on what the broker allows.

They can afford to use these high levels of leverage because they understand what they are getting into, have experience and, in particular, know how to hedge properly.

Which Leverage to Choose Based on Your Account Balance

The answer to which leverage to choose can sometimes come from the amount of capital the trader has in their account. As a general rule, the higher the capital in the account, the lower the leverage.

With an account balance of $10, for example, you need high leverage to open a position while also having enough margin to keep it open.

With leverage of 1:500, for example, you can buy 2 micro lots (1 micro lot = 1,000 units of the base currency) of EUR/USD, or 2,000 EUR/USD, for just $4 of required margin. The table below gives an overview of how required margin is calculated according to the leverage level.

So to buy this EUR/USD position with leverage of 1:500, you need to commit $4 of your capital: (1/leverage) × position size = (1/500) × 2,000 = 0.002 × 2,000 = $4.

This is very attractive, but you also need to consider what you have left in your account and the broker’s margin call and stop-out levels.

For this trade, 1 pip equals $0.20. The table below gives an overview of pip values by lot size.

Since you are buying 2 micro lots, 1 pip is worth $0.10 × 2 = $0.20. If your position loses 45 pips, you lose 45 × $0.20 = $9 in your account. Your account balance is then $1, which is below 50% of the required margin (the margin was $4, and 50% of $4 = $2). Since brokers generally apply a 50% stop-out level, your position will be closed automatically.

With an account balance of $500, however, everything would be different. If you open the same position as in the example above (but with $500 in your account), you have more free margin to prevent your position from being closed if EUR/USD loses 45 pips, and you can use the rest of the money in your account to invest in other currencies or assets with leverage.

With a balance of more than $500, say $2,000, you have even more room for manoeuvre. In this case, using leverage of 1:100 for example, you need $10 of margin per micro lot. So for the same position as in the example above (2 micro lots), you only commit $10 × 2 = $20 of margin. And this $20 represents just 1% of your $2,000 balance.

Put simply, in this scenario with a $2,000 balance, you only need 1% of your balance ($20) to open a 2-micro-lot position with 1:100 leverage, whereas with 1:500 leverage and a $10 balance, you need 40% of your capital ($4) to open the same position.

In short, to know which leverage to choose based on your account balance, keep in mind that high leverage is suited to small balances (under $500 or €500). High leverage has the advantage of letting you open large positions with very small amounts, but the drawback of risking a larger percentage of your account balance.

Look above: with $10, you risk 40% of your balance, whereas with $2,000 you risk just 1% of your balance, for the same position. And even though the leverage used with a $2,000 balance is lower than with a $10 balance, it is still high (1:100 with $2,000 and 1:500 with $10).

If you are confident about how your positions will move and have little money in your account, you can use the maximum leverage offered by the broker. This would let you multiply your potential gains impressively. If, on the other hand, you want to be more cautious while still using high leverage, it is better to add more money to your account (over $500 or €500) and open your positions with high, but not maximum, leverage.

Which Leverage to Use Based on Your Investor Profile

Your investor profile can also tell you which leverage to choose. Even if it does not give you the exact level, it tells you whether it should be very low, low, medium, high or very high (maximum).

Determining your investor profile simply means working out who you are, how you behave when facing risk and what you are prepared to risk to achieve a given return.

As a general rule, the higher the leverage, the higher the levels of risk and potential return. So if you are someone who likes taking risks, you will opt for very high leverage, and vice versa.

You may fit one of the following profiles and therefore use the corresponding leverage levels:

• The aggressive investor is primarily seeking returns, even if it means risking everything. They are impatient and handle stress very well. This type of investor can use the highest leverage (1:500; 1:1,000; 1:2,000; 1:3,000) with high margins too.
• The dynamic investor likes taking risks, is often impatient and prioritises returns. They can use high leverage (1:100; 1:200; 1:300; 1:400).
• The neutral investor does not like risk much but knows they need to take a minimum of risk to boost the returns on their trades. They can use medium leverage of 1:30, 1:50, etc.
• The defensive investor is afraid of risk but may occasionally flirt with risky trades. They can use low leverage of 1:10 to 1:20.
• The conservative investor is very risk-averse and prefers stability. They can opt for very low leverage of 1:2 to 1:5.

Which Leverage to Choose Based on Your Trading Strategy

The trading strategies traders adopt sometimes reflect their investor profiles. So the answer to which leverage to choose based on your trading strategy can be linked in some ways to the previous section on investor profiles.

Scalpers and day traders are generally dynamic and aggressive investors (see above) and can use high or even very high leverage (1:100 to 1:3,000) without any problem.

But that is not the only reason high leverage suits traders who scalp or use short-term strategies. In the short term (within the same day, for example), price movements are very small. To profit from them, you need to invest large sums (open and close very large positions). Leverage therefore becomes an essential tool for opening such positions, which is why traders with short-term strategies use the highest leverage.

Swing traders and those with other medium- to long-term strategies are generally less aggressive and more cautious. For these traders, low leverage (1:2; 1:5; 1:10) is recommended.

Low leverage is also recommended for these longer-term traders because over the medium to long term, price movements are generally larger, and you do not need maximum leverage to profit from them (unless you are very greedy). A substantial margin or initial investment is nevertheless needed.

Which Leverage to Use Based on an Asset’s Volatility

The previous analysis on which leverage to choose based on your trading strategy ties in with this section, since we assumed above that assets were less volatile in the short term.
In short, the more volatile an asset’s price, the lower the leverage the trader should use.
Take forex currency pairs as an example:

• Major currency pairs

These are the most traded currency pairs in the world, led by EUR/USD. When a trader decides to sell this pair, its price logically falls. But because this pair is so widely traded worldwide, that trader’s sale represents only a tiny fraction of the pair’s traded volume, and the resulting price fall will also be tiny.

As a result, EUR/USD has low volatility and does not see large price swings. To profit from the small moves that do occur, you need to deploy significant capital through high leverage.

• Minor and exotic currency pairs

Conversely, minor and exotic currency pairs are less traded than majors, and a few large investors can move the price considerably with their positions. Their prices can therefore swing widely (they are very volatile). Potential risks and gains are higher. A cautious trader will use low leverage, while an aggressive trader may use high leverage or commit more funds with medium leverage.
Taking these criteria into account tells you which leverage to choose; note that they can be combined to make a better choice. For example, you might ask which leverage to choose when you are a beginner with little capital and a low risk tolerance. In that case, you get the answer by combining our advice for each criterion (which leverage to choose as a beginner, based on your account balance and based on your investor profile).

Diversifiez votre patrimoineInvestissez dans l’artDes tableaux originaux, pièces uniques signées par l’artiste. Un actif tangible, loin des écrans et des cotations.Voir les tableaux →

Which Leverage to Use: The Leverage Levels Offered by Brokers

The leverage levels on offer vary from one broker to another, and from one regulator to another (particularly in terms of leverage caps). The leverage levels traders can generally choose from are as follows:

• 1:2 to 1:30 for brokers regulated in the EU under ESMA. This means that with $1 in your account, you can open a position worth up to $30. With a $100 deposit, you can therefore make trades worth $200 (1:2 leverage) to $3,000 (1:30 leverage).
• 1:50. For every $1 in your account, you can open a $50 position. So if you have $500 in your account, you can open a position of up to $25,000.
• 1:100. You can make a $100 trade with just $1. With $1,000 in your account, you can trade positions totalling $100,000.
• 1:200. You can open a trade worth $200 with just $1 in your account. With $600 in your account, for example, you can make a trade of $120,000.
• 1:400. With $1 in your account, you can trade $400 positions. A $100 deposit therefore lets you control $40,000 thanks to this leverage.
• 1:500. You trade a $500 position with just $1, so you can control a $500,000 position if you have $1,000 in your account.
• 1:1,000. With $1, you can open a $1,000 position, so with $1,000 in your account, this leverage lets you open a $1,000,000 position.
• 1:2,000. Your account balance is multiplied by 2,000 for a position. So with just $100 in your account, you can open a $200,000 trade.
• 1:3,000. This trading multiplier lets you open a $3,000 position with just $1 in your account. So with $1,000 in your account, you can invest $3,000,000.

Of course, leverage levels are not limited to those listed above. They range anywhere from 1:2 to 1:3,000, so you will find leverage of 1:300, 1:888, etc., depending on the broker and the instrument.

The Best Brokers for Each Leverage Level

The following table shows the current best brokers for each leverage level.

Leverage	Best Broker	Visit
1:2 to 1:20		67% of retail CFD accounts lose money.
1:50		Visit Axi
1:100		Visit Vantage FX
1:200		Visit Vantage FX
1:400		Visit Axi
1:500		Visit Vantage FX
1:888
1:1,000		Visit InstaForex

Pros and Cons of Low Leverage

In this guide on which leverage to choose, we classify ESMA’s maximum leverage levels as low leverage, that is, leverage from 1:2 to 1:30. It offers traders many advantages, but also risks and drawbacks.

Advantages

• Increased investment capacity

Even low leverage first and foremost lets you invest more than you could with your base capital. With $100 in your account, you can open a position of up to $3,000 (1:30 leverage).

• Larger potential gains

When prices move in your favour, the low leverage you used to open the position increases your gains. This increase is even greater when you use low leverage with large capital.

• Excellent for profiting from big market moves

Low leverage is excellent for medium- to long-term trading strategies (swing trading, for example) and helps boost the trader’s return on the large price moves that often occur over the medium to long term.

• Less amplification of potential losses

Low leverage multiplies gains less, but it also has the advantage of multiplying losses less (unlike high leverage). If prices move against you, you do not risk a large proportion of your account balance.

• Lower chance of a margin call or stop out

Compared with high leverage, low leverage reduces the chances of the broker issuing a margin call or automatically closing your positions. When prices move against you, your losses are multiplied less (because the leverage or trading multiplier is low), so you can withstand an adverse price move for longer without receiving a margin call or having your position closed.

Disadvantages

• Larger potential losses

As with high leverage, low leverage also increases your losses when prices move against you. But the increase is smaller than with high leverage.

• Smaller increase in potential gains

Obviously, compared with high leverage, low leverage multiplies your profits to a lesser extent when prices move in your favour. However, since the required margin is high, your own (large) committed capital already helps increase gains if prices move your way.

• Higher required margin

With low leverage, you need to commit a larger amount of your capital than with high leverage. For example, the margin required to open a position with high leverage of 1:500 is 0.2%, whereas with low leverage of 1:2, the required margin is 50%. In practice, to open a $10,000 position with 1:500 leverage, you only need 0.2% × 10,000 = $20 in your account. Whereas to open the same $10,000 position with low leverage of 1:2, you need up to 50% × 10,000 = $5,000 in your account.
As a general rule, the lower the leverage, the higher the required margin (the capital you need in your account) to open a position.

• Fees to pay

As with high leverage, you have to pay interest or other fees to the broker when you use low leverage, unless you use halal leverage through an Islamic account with no interest on leverage (on eToro, for example, you need to sign up and contact customer service to get this kind of account, while at Vantage you simply follow the sign-up process and choose one of the swap-free Islamic accounts the broker offers).

Pros and Cons of High Leverage

Offshore and non-ESMA brokers now offer French-speaking traders high or even very high leverage, from 1:50 to 1:3,000. It has many advantages as well as risks and drawbacks.

Advantages

• Open huge positions with very little capital

One of the main features and advantages of high leverage is that it lets you trade very large positions while committing only a small amount of capital. Without such leverage, you would need huge sums in your account to open large positions. The higher the leverage, the less capital (margin) you need to open a position.

• Considerably larger potential profits

In practice, with $1,000 in your account and high leverage of 1:1,000, for example, you can buy up to 10 standard lots of a currency pair (1 standard lot = 100,000 units of the base currency). You are therefore investing $1,000,000 from your $1,000. Since 1 pip is worth $10 per standard lot, every 1-pip move in your favour earns you $100 ($10 per lot across 10 lots). So a favourable 10-pip move earns you $1,000!

• Ideal for profiting from low-volatility assets and markets

With low-volatility assets or markets, it is almost impossible to make big profits unless you invest large sums in your trades. Without large sums, very high leverage lets you open huge positions with small or medium account balances and therefore profit from even very small price moves in your favour.

Disadvantages

• Considerably larger potential losses

Going back to the example above on larger potential profits, note that if prices move against you, every 1-pip move will cost you $100. So you lose $1,000 if prices move 10 pips against you.

• Higher chance of a margin call and stop out

When prices move against you and you have used very high leverage, a small market move is enough for you to receive a margin call or have your position closed. Again using the example above, if prices move 10 pips against you, you lose $1,000. That $1,000 is your entire (100%) account balance, so the broker closes your position. In fact, a 5-pip move against you would be enough to close the position if the broker has set a 50% stop out, as is often the case.

• Fees to pay

Leverage is not free, whether you make a profit or a loss with it. Since leverage is a loan, the broker generally charges interest and other fees on it, such as rollover fees. With forex leverage, if you hold a position open for more than 24 hours, you may have to pay swap fees. All these interest charges and fees vary from broker to broker. Only traders using Islamic leverage are not subject to them, since interest or usury is forbidden under Islam. This type of leverage is offered by the best Islamic trading brokers with Islamic or swap-free trading accounts.

Tips for Choosing and Using Leverage Well in Trading

To conclude this guide on which leverage to choose, here are some valuable tips (in addition to those given above) to help you choose and use leverage well in trading:

• Choose a leverage level you are comfortable with and that matches your risk tolerance.
• Choose leverage that does not expose a large proportion of your account capital (some experts recommend committing only 2% of your capital to each leveraged position).
• Use stop loss and trailing stop orders to reduce your risk every time you use leverage.
• With high leverage, try to set a stop loss close to your position’s opening price (your entry price), so that small price moves do not cost you a lot.
• Practise with different leverage ratios to see which one suits you.
• Use high leverage on low-volatility assets, not on highly volatile assets such as commodity CFDs or minor and exotic currency pairs.
• Don’t feel you always have to use maximum leverage just because the broker offers it (if you can use leverage of up to 1:1,000, you do not have to use it; you can opt for 1:500 or less).
• Learn to accept your losses when prices move against you, and learn to accept even modest profits. This means setting stop losses and take profits for your leveraged positions.
• Manage the maximum leverage and minimum leverage that suit your trading strategy

Are you used to trading with leverage? Or are you just starting to use leverage in your trading? Either way, feel free to share your experience with us in the comments below!