{
  "url": "https://thetraderwiki.com/en/leverage-and-margin/",
  "canonical": "https://thetraderwiki.com/en/leverage-and-margin/",
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  "markdown": "https://thetraderwiki.com/en/leverage-and-margin/index.md",
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  "kind": "article",
  "key": "leverage-and-margin",
  "title": "What is leverage in trading? Leverage and margin",
  "h1": "Leverage and margin in trading: how they work and what they do to your buying power",
  "description": "Leverage and margin in trading, with worked examples: the buying power each margin rate gives, the margin terms you’ll see and who sets the limits.",
  "keywords": [
    "what is leverage in trading",
    "what is margin in trading",
    "CFD leverage",
    "forex leverage",
    "margin call",
    "margin close-out"
  ],
  "published": "2026-09-05",
  "updated": "2026-10-15",
  "author": {
    "name": "Sebastian M.",
    "url": "https://thetraderwiki.com/en/authors/sebastian-m/"
  },
  "publisher": {
    "name": "TheTraderWiki",
    "url": "https://thetraderwiki.com/"
  },
  "riskWarning": "CFDs are complex, leveraged products, and the regulators’ own figures show that most retail accounts lose money. Nothing on TheTraderWiki is investment advice. Read the full risk disclosure, and if you’re unsure, talk to a qualified adviser. Broker details can change and they can be wrong. Before you open an account, confirm them with the broker and the regulator’s register.",
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      "url": "https://thetraderwiki.com/en/"
    },
    {
      "name": "Guides",
      "url": "https://thetraderwiki.com/en/learn/"
    },
    {
      "name": "Leverage and margin",
      "url": "https://thetraderwiki.com/en/leverage-and-margin/"
    }
  ],
  "lead": [
    "Leverage lets you open a trade bigger than the money you put down. That money is called margin, a deposit your provider holds while the trade is open. The ratio between the trade and the deposit is your leverage. On this site, the trade is a CFD. A CFD is a contract that pays you, or charges you, the change in an asset’s price without you ever owning the asset. At 30:1, a single dollar of margin gives you thirty of exposure. At 500:1, that same unit controls five hundred of exposure. That extra size is your buying power. Losses work the same way, so a move of one part in thirty against a 30:1 trade wipes out the deposit.",
    "On this page you’ll find out how leverage and margin work, how much buying power each margin rate gives and what each margin figure on your platform means. How much leverage you can use depends on the company that opens your account. Companies licensed in the EU, the UK and Australia apply retail limits, while a group’s global companies set their own (maximum leverage)."
  ],
  "leadLinks": [
    {
      "label": "margin",
      "url": "https://thetraderwiki.com/en/glossary/#margin",
      "type": "internal"
    },
    {
      "label": "CFD",
      "url": "https://thetraderwiki.com/en/glossary/#cfd",
      "type": "internal"
    },
    {
      "label": "the company that opens your account",
      "url": "https://thetraderwiki.com/en/broker-groups-and-regulators/",
      "type": "internal"
    },
    {
      "label": "maximum leverage",
      "url": "https://thetraderwiki.com/en/maximum-leverage/",
      "type": "internal"
    }
  ],
  "blocks": [
    {
      "type": "list",
      "id": "key-points",
      "heading": "Key points",
      "url": "https://thetraderwiki.com/en/leverage-and-margin/#key-points",
      "ordered": false,
      "items": [
        "Leverage is buying power. It lets a small deposit control a much bigger trade, magnifying your gains and your losses by the same multiple. It doesn’t change the odds of winning.",
        "The margin rate determines your buying power. A lower rate means the same deposit can open a larger trade.",
        "Initial margin opens a trade. Whether the trade stays open depends on your margin level: your equity divided by the margin needed.",
        "Your provider will close your trades when your equity falls too far. At companies under EU, UK and Australian rules, that point is 50 % of the margin needed (ESMA ESMA Decision (EU) 2018/796). At a global company, its own terms decide the level.",
        "Watch your effective leverage, the total size of your open trades divided by your equity. The leverage you’re offered is only a ceiling, and nothing forces you to approach it."
      ],
      "links": [
        {
          "label": "ESMA",
          "url": "https://www.esma.europa.eu/",
          "type": "source",
          "title": "European Securities and Markets Authority",
          "publisher": "ESMA"
        },
        {
          "label": "ESMA Decision (EU) 2018/796",
          "url": "https://eur-lex.europa.eu/eli/dec/2018/796/oj",
          "type": "source",
          "title": "ESMA Decision (EU) 2018/796 of 22 May 2018 to temporarily restrict contracts for differences in the Union",
          "publisher": "Official Journal of the European Union (EUR-Lex)"
        }
      ]
    },
    {
      "type": "prose",
      "id": "what-leverage-is",
      "heading": "What is leverage in trading?",
      "url": "https://thetraderwiki.com/en/leverage-and-margin/#what-leverage-is",
      "basis": "arithmetic",
      "basisLabel": "Worked arithmetic: the numbers follow from the formula given in this section.",
      "paragraphs": [
        "Leverage in trading is the multiple between the size of your trade and the margin you put down to hold it. On a CFD it exists because the provider only settles the change in price, so you never pay the full price of the asset. If your provider asks for one tenth of the trade’s size as margin, it’s offering you ten to one, and $1,000 of margin opens a $10,000 trade.",
        "That extra size is your buying power, and the margin rate determines how much you get. A lower rate means the same deposit can open a bigger trade. At a 5 % rate $1,000 opens $20,000, at 1 % it opens $100,000 and at 0.2 % it opens $500,000.",
        "The profit or loss you make is calculated on the full trade, not on the margin. With a ratio of ten to one, a price shift of one per cent becomes a ten per cent change in your margin. A ten per cent move against you uses up the margin completely. The multiple also applies to every cost charged on the trade’s full size, and that includes overnight financing, the fee for holding a trade past the end of the trading day.",
        "Leverage doesn’t alter the market and doesn’t give you any edge in forecasting it. A leveraged trade has exactly the same odds of success or failure as a trade without leverage. What it does change is how large the outcome is relative to the money you’re risking, and how quickly a series of losses can drain your account. According to ESMA’s own analysis, the retail loss rates reported by regulators stem from that speed of loss combined with the product’s costs (ESMA Decision (EU) 2018/796)."
      ],
      "links": [
        {
          "label": "overnight financing",
          "url": "https://thetraderwiki.com/en/costs-and-fees/#overnight-financing",
          "type": "internal"
        },
        {
          "label": "ESMA Decision (EU) 2018/796",
          "url": "https://eur-lex.europa.eu/eli/dec/2018/796/oj",
          "type": "source",
          "title": "ESMA Decision (EU) 2018/796 of 22 May 2018 to temporarily restrict contracts for differences in the Union",
          "publisher": "Official Journal of the European Union (EUR-Lex)"
        }
      ]
    },
    {
      "type": "table",
      "id": "retail-caps",
      "heading": "How much leverage you can get",
      "url": "https://thetraderwiki.com/en/leverage-and-margin/#retail-caps",
      "intro": [
        "The company that opens your account decides how much leverage you can get, not the brand. Each broker group runs several companies, every one licensed in its own country (global companies). Most traders are retail clients, the standard type of customer and the one the rules protect most. When a company licensed in the EU, the UK or Australia onboards you as a retail client, the table’s limits apply. ESMA, the FCA and ASIC set those limits through product intervention, a regulator’s power to limit or ban how a product is sold (ESMA product intervention, FCA PS19/18, ASIC order)."
      ],
      "caption": "Maximum retail leverage at companies bound by the EU and UK rules, and the initial margin that goes with it (ESMA Decision (EU) 2018/796, Annex I).",
      "head": [
        "Underlying",
        "Maximum leverage",
        "Initial margin"
      ],
      "rows": [
        [
          "Major currency pairs",
          "30:1",
          "3.33 %"
        ],
        [
          "Non-major currency pairs, gold, major stock indices",
          "20:1",
          "5 %"
        ],
        [
          "Commodities other than gold, non-major stock indices",
          "10:1",
          "10 %"
        ],
        [
          "Individual shares and any other reference value",
          "5:1",
          "20 %"
        ],
        [
          "Cryptocurrencies",
          "2:1",
          "50 %"
        ]
      ],
      "numericColumns": [
        1,
        2
      ],
      "outro": [
        "If one of the group’s global companies onboards you, those limits don’t apply. The global company sets its own leverage, and the broker comparison shows figures of up to 500:1, with the conditions that decide whether you get them. The difference between a global company and one bound by those limits is protection. Under the EU, UK and Australian rules a 50 % close-out level and negative balance protection also apply, and a global company may or may not offer the same.",
        "Where the limits apply, the rules define which currency pairs and indices are major, so your provider can’t decide that. A major pair is any two of the US dollar, the euro, the yen, the pound, the Canadian dollar and the Swiss franc. Australia’s rules add the Australian dollar, so a pair like AUD/USD gets 30:1 there but 20:1 in the EU and the UK (ASIC order). The major indices are a named list of large stock indices in developed markets (ESMA Decision (EU) 2018/796).",
        "Any provider can ask for more margin than its maximum leverage implies, and it can do this whenever it wants. Many ask for more margin ahead of major news or for big trades (maximum leverage). If you’re a retail client, a company tied to the retail limits can’t demand less margin."
      ],
      "links": [
        {
          "label": "global companies",
          "url": "https://thetraderwiki.com/en/offshore-brokers/",
          "type": "internal"
        },
        {
          "label": "retail clients",
          "url": "https://thetraderwiki.com/en/glossary/#retail-client",
          "type": "internal"
        },
        {
          "label": "FCA",
          "url": "https://www.fca.org.uk/",
          "type": "source",
          "title": "Financial Conduct Authority",
          "publisher": "FCA"
        },
        {
          "label": "ASIC",
          "url": "https://asic.gov.au/",
          "type": "source",
          "title": "Australian Securities and Investments Commission",
          "publisher": "ASIC"
        },
        {
          "label": "product intervention",
          "url": "https://thetraderwiki.com/en/glossary/#product-intervention",
          "type": "internal"
        },
        {
          "label": "ESMA product intervention",
          "url": "https://www.esma.europa.eu/policy-activities/mifid-ii-and-investor-protection/product-intervention",
          "type": "source",
          "title": "Product Intervention",
          "publisher": "ESMA"
        },
        {
          "label": "FCA PS19/18",
          "url": "https://www.fca.org.uk/publications/policy-statements/ps19-18-restricting-contract-difference-products-sold-retail-clients",
          "type": "source",
          "title": "PS19/18: Restricting contract for difference products sold to retail clients",
          "publisher": "FCA"
        },
        {
          "label": "ASIC order",
          "url": "https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-254mr-asic-product-intervention-order-strengthens-cfd-protections/",
          "type": "source",
          "title": "20-254MR ASIC product intervention order strengthens CFD protections",
          "publisher": "ASIC"
        },
        {
          "label": "ESMA Decision (EU) 2018/796",
          "url": "https://eur-lex.europa.eu/eli/dec/2018/796/oj",
          "type": "source",
          "title": "ESMA Decision (EU) 2018/796 of 22 May 2018 to temporarily restrict contracts for differences in the Union",
          "publisher": "Official Journal of the European Union (EUR-Lex)"
        },
        {
          "label": "broker comparison",
          "url": "https://thetraderwiki.com/en/compare-brokers/#above-500",
          "type": "internal"
        },
        {
          "label": "negative balance protection",
          "url": "https://thetraderwiki.com/en/glossary/#negative-balance-protection",
          "type": "internal"
        },
        {
          "label": "maximum leverage",
          "url": "https://thetraderwiki.com/en/maximum-leverage/#tiers",
          "type": "internal"
        }
      ]
    },
    {
      "type": "steps",
      "id": "arithmetic",
      "heading": "The sums for one leveraged trade, step by step",
      "url": "https://thetraderwiki.com/en/leverage-and-margin/#arithmetic",
      "basis": "illustrative",
      "basisLabel": "Illustrative figures: a made-up example, not a forecast or a quote.",
      "intro": [
        "One example makes the sums for a leveraged trade easiest to follow. Both the trade and the account are made up. The margin rate is 3.33 %, the lowest a company bound by the EU or UK limits can set for a retail client on a major pair (ESMA Decision (EU) 2018/796). Say you have 1,000 in your account, held in the pair’s quote currency, the second currency in the pair. You buy 10,000 units of a major currency pair at 1.1000 (forex trading)."
      ],
      "howto": false,
      "items": [
        {
          "id": "arithmetic-step-1",
          "title": "Notional value",
          "text": "10,000 units at 1.1000 gives a notional value of 11,000. The notional value is the full size of your trade, and every gain, loss and financing charge is worked out on it."
        },
        {
          "id": "arithmetic-step-2",
          "title": "Margin needed",
          "text": "3.33 % of 11,000 is 366.30. Your provider sets that amount aside. The other 633.70 is your free equity."
        },
        {
          "id": "arithmetic-step-3",
          "title": "Effective leverage",
          "text": "Your effective leverage is 11:1, from an exposure of 11,000 against equity of 1,000. That’s well under the 30:1 the margin rate allows, because your account holds more than the minimum margin."
        },
        {
          "id": "arithmetic-step-4",
          "title": "A move of one pip",
          "text": "A pip is the standard unit a currency price moves in, and on this pair it’s 0.0001. So each pip is worth 10,000 × 0.0001 = 1.00 to you (pips and lots). A move of 50 pips against you costs 50, or 5 % of your account."
        },
        {
          "id": "arithmetic-step-5",
          "title": "When your free equity runs out",
          "text": "Your free equity of 633.70 is gone after a loss of 633.70, and that takes a move of about 634 pips against you, from 1.1000 to about 1.0366. At roughly this level, your provider may trigger a margin call, though it doesn’t have to warn you beforehand."
        },
        {
          "id": "arithmetic-step-6",
          "title": "The close-out point",
          "text": "Under the EU and UK rules, the close-out comes when your equity falls to 50 % of the margin needed. Here the close-out point is 183.15. You reach it after a loss of 816.85, about 817 pips. Your provider closes the trade at the market price at that moment, and about 183 of your original 1,000 is left."
        }
      ],
      "outro": [
        "Putting 5,000 in your account and opening the same trade would give you an effective leverage of 2.2:1. The pip value stays the same, and the margin stays the same too. That trade would withstand a move of several thousand pips. It’s still the same trade, but the risk is very different. The leverage available to you and the leverage you use are not the same number."
      ],
      "links": [
        {
          "label": "ESMA Decision (EU) 2018/796",
          "url": "https://eur-lex.europa.eu/eli/dec/2018/796/oj",
          "type": "source",
          "title": "ESMA Decision (EU) 2018/796 of 22 May 2018 to temporarily restrict contracts for differences in the Union",
          "publisher": "Official Journal of the European Union (EUR-Lex)"
        },
        {
          "label": "quote currency",
          "url": "https://thetraderwiki.com/en/glossary/#quote-currency",
          "type": "internal"
        },
        {
          "label": "forex trading",
          "url": "https://thetraderwiki.com/en/forex-trading/#pips-and-lots",
          "type": "internal"
        },
        {
          "label": "pip",
          "url": "https://thetraderwiki.com/en/glossary/#pip",
          "type": "internal"
        },
        {
          "label": "pips and lots",
          "url": "https://thetraderwiki.com/en/pips-lots-and-position-size/#pip-value",
          "type": "internal"
        },
        {
          "label": "margin call",
          "url": "https://thetraderwiki.com/en/glossary/#margin-call",
          "type": "internal"
        }
      ]
    },
    {
      "type": "subsections",
      "id": "margin-terms",
      "heading": "Margin terms on your platform",
      "url": "https://thetraderwiki.com/en/leverage-and-margin/#margin-terms",
      "intro": [
        "Margin terms on a CFD platform boil down to six connected numbers. Your platform refreshes all six whenever the price changes."
      ],
      "items": [
        {
          "id": "initial-margin",
          "heading": "Initial margin",
          "url": "https://thetraderwiki.com/en/leverage-and-margin/#initial-margin",
          "paragraphs": [
            "Initial margin is the deposit you need to open a trade. You work it out by multiplying the margin rate for that type of asset by the trade’s full size at the opening price. A company subject to EU, UK or Australian retail limits can’t set the initial margin below the legal minimum for that asset (ESMA Decision (EU) 2018/796). Any provider can ask for more."
          ]
        },
        {
          "id": "maintenance-margin",
          "heading": "Maintenance margin",
          "url": "https://thetraderwiki.com/en/leverage-and-margin/#maintenance-margin",
          "paragraphs": [
            "To hold a running trade open, your provider needs a certain level of equity in your account, and that equity is the maintenance margin. On most platforms maintenance margin equals the initial margin, worked out again at the current price. Where a provider sets a separate, lower maintenance figure, that’s its own threshold. The close-out level is still measured against the initial margin at a company bound by the EU and UK rules (ESMA Decision (EU) 2018/796)."
          ]
        },
        {
          "id": "free-margin",
          "heading": "Free margin",
          "url": "https://thetraderwiki.com/en/leverage-and-margin/#free-margin",
          "paragraphs": [
            "Free margin is also called free equity and available funds. It equals your equity minus the margin held against your open trades. This is what you have left to open new trades and to absorb losses on your current ones. Each unit you lose on an open trade reduces your free margin by one unit, even before you close the trade."
          ]
        },
        {
          "id": "margin-level",
          "heading": "Margin level",
          "url": "https://thetraderwiki.com/en/leverage-and-margin/#margin-level",
          "paragraphs": [
            "Margin level is your equity divided by the margin needed, shown as a percentage. Most platforms give it more screen space than anything else (glossary). At two hundred per cent your equity is twice the margin needed. At one hundred per cent you have no free margin left. Your provider closes trades when the margin level drops far enough. At a company regulated in the EU, the UK or Australia, the closing level is fifty per cent (ESMA Decision (EU) 2018/796). At a global company, it’s the level in the company’s own terms."
          ]
        },
        {
          "id": "margin-call",
          "heading": "Margin call",
          "url": "https://thetraderwiki.com/en/leverage-and-margin/#margin-call",
          "paragraphs": [
            "A margin call is a message your provider sends when your margin level falls below a threshold it chooses, usually at or near one hundred per cent. The message asks you to add money or cut your trades. Think of it as a warning, not a protection. A call doesn’t always arrive before a close-out, and in a fast market the two can land together or in the wrong order."
          ]
        },
        {
          "id": "margin-close-out",
          "heading": "Margin close-out",
          "url": "https://thetraderwiki.com/en/leverage-and-margin/#margin-close-out",
          "paragraphs": [
            "Margin close-out is the rule that forces your provider to close one or more of your trades when your equity drops too low. At a company regulated in the EU, the UK or Australia, the rule kicks in once your equity reaches 50 % of the total initial margin on every open trade. There it looks at your whole account, not at each trade on its own (ESMA Decision (EU) 2018/796, FCA PS19/18). A global company sets the close-out level in its own terms. A company regulated in the EU, the UK or Australia also has to give a retail client negative balance protection. With that protection, the client can’t lose more than the money in the account if the price leaps straight past the close-out level."
          ]
        }
      ],
      "links": [
        {
          "label": "ESMA Decision (EU) 2018/796",
          "url": "https://eur-lex.europa.eu/eli/dec/2018/796/oj",
          "type": "source",
          "title": "ESMA Decision (EU) 2018/796 of 22 May 2018 to temporarily restrict contracts for differences in the Union",
          "publisher": "Official Journal of the European Union (EUR-Lex)"
        },
        {
          "label": "glossary",
          "url": "https://thetraderwiki.com/en/glossary/#margin-level",
          "type": "internal"
        },
        {
          "label": "FCA PS19/18",
          "url": "https://www.fca.org.uk/publications/policy-statements/ps19-18-restricting-contract-difference-products-sold-retail-clients",
          "type": "source",
          "title": "PS19/18: Restricting contract for difference products sold to retail clients",
          "publisher": "FCA"
        },
        {
          "label": "negative balance protection",
          "url": "https://thetraderwiki.com/en/glossary/#negative-balance-protection",
          "type": "internal"
        }
      ]
    },
    {
      "type": "prose",
      "id": "effective-leverage",
      "heading": "Effective leverage is the figure that matters",
      "url": "https://thetraderwiki.com/en/leverage-and-margin/#effective-leverage",
      "basis": "arithmetic",
      "basisLabel": "Worked arithmetic: the numbers follow from the formula given in this section.",
      "paragraphs": [
        "Effective leverage is the total size of all your open trades divided by your equity. That figure decides how fast your account can be emptied, whatever leverage your provider offers. Say you have $1,000 and one trade worth $5,000, so your effective leverage is 5:1. Three trades that size make it 15:1, and a 7 % move against all three then wipes out your equity. In markets that move together, that’s really one move, not three.",
        "Here’s how the multiple works on a single trade with made-up numbers. You put down $1,000 of margin and open a trade worth $10,000, so you’re using 10:1. If the price rises 3 %, the trade gains $300. That’s a 30 % gain on your money. A 3 % fall loses $300 just as quickly. A 10 % fall costs the whole $1,000. Someone who bought $1,000 of the asset outright would have lost $100 on a 10 % fall.",
        "The formula is short. Effective leverage = total size of open trades ÷ equity. The risk management page shows how to keep it in a range that survives a bad week.",
        "Providers advertise their maximum leverage because it’s the biggest number they can show. That figure tells you how small your margin can be, but it does not reveal how much of your account you use. If you use the maximum on your full balance, a move of a few per cent wipes you out. At 500:1, a move of 0.2 % is enough."
      ],
      "links": [
        {
          "label": "risk management",
          "url": "https://thetraderwiki.com/en/risk-management/#account-exposure",
          "type": "internal"
        }
      ]
    },
    {
      "type": "list",
      "id": "how-leverage-is-limited",
      "heading": "What limits the leverage you use",
      "url": "https://thetraderwiki.com/en/leverage-and-margin/#how-leverage-is-limited",
      "intro": [
        "Four things limit the leverage you use. The first two vary with the company that holds your account."
      ],
      "ordered": false,
      "items": [
        "The company that opens your account sets the maximum. At a company licensed in the EU, the UK or Australia, that’s the retail limit for each type of asset. You can only go beyond it there by getting reclassed as a professional client with a professional account, and that means you lose the retail protections (becoming a professional client). A global company sets its own maximum (opening an account with a global company).",
        "Your provider’s own margin rates can be higher than the minimum that its maximum leverage implies. That happens on instruments with high volatility, whose prices swing a lot, on large trades, ahead of scheduled events and overnight.",
        "Your trade size is what sets the effective leverage you actually use. The risk management page calculates it based on how far away your stop is. The margin plays no part in it.",
        "The close-out level doesn’t restrict leverage ahead of time. What it does is cap how far a leveraged loss can go before your provider steps in (how a trade works)."
      ],
      "links": [
        {
          "label": "professional client",
          "url": "https://thetraderwiki.com/en/glossary/#professional-client",
          "type": "internal"
        },
        {
          "label": "professional account",
          "url": "https://thetraderwiki.com/en/trading-account-types/#professional-account",
          "type": "internal"
        },
        {
          "label": "becoming a professional client",
          "url": "https://thetraderwiki.com/en/maximum-leverage/#professional",
          "type": "internal"
        },
        {
          "label": "opening an account with a global company",
          "url": "https://thetraderwiki.com/en/maximum-leverage/#offshore",
          "type": "internal"
        },
        {
          "label": "volatility",
          "url": "https://thetraderwiki.com/en/glossary/#volatility",
          "type": "internal"
        },
        {
          "label": "scheduled events",
          "url": "https://thetraderwiki.com/en/economic-calendar/#releases-that-move-markets",
          "type": "internal"
        },
        {
          "label": "risk management",
          "url": "https://thetraderwiki.com/en/risk-management/#position-sizing",
          "type": "internal"
        },
        {
          "label": "stop",
          "url": "https://thetraderwiki.com/en/stop-loss-orders/#placing-a-stop",
          "type": "internal"
        },
        {
          "label": "how a trade works",
          "url": "https://thetraderwiki.com/en/how-cfd-trading-works/#closing-or-close-out",
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      "type": "callout",
      "id": "leverage-warning",
      "heading": "Leverage turns ordinary price moves into total losses",
      "url": "https://thetraderwiki.com/en/leverage-and-margin/#leverage-warning",
      "variant": "warning",
      "label": "Risk warning",
      "paragraphs": [
        "Leverage turns ordinary price moves into total losses. A fully leveraged trade loses its whole margin on a move of about 3.3 % against it at 30:1, and on a move of 0.2 % at 500:1. ESMA capped retail leverage for that reason: retail clients were being closed out by price moves of everyday size (ESMA Decision (EU) 2018/796).",
        "More leverage means bigger positions, so bigger losses as well as bigger gains. Whatever maximum you’re offered, nothing stops you using far less."
      ],
      "links": [
        {
          "label": "ESMA Decision (EU) 2018/796",
          "url": "https://eur-lex.europa.eu/eli/dec/2018/796/oj",
          "type": "source",
          "title": "ESMA Decision (EU) 2018/796 of 22 May 2018 to temporarily restrict contracts for differences in the Union",
          "publisher": "Official Journal of the European Union (EUR-Lex)"
        }
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    {
      "type": "faq",
      "id": "leverage-and-margin-questions",
      "heading": "Common questions about leverage and margin",
      "url": "https://thetraderwiki.com/en/leverage-and-margin/#leverage-and-margin-questions",
      "intro": [
        "Most questions about leverage and margin ask what each term means on the platform."
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          "id": "what-is-margin-in-trading",
          "question": "What is margin in trading?",
          "url": "https://thetraderwiki.com/en/leverage-and-margin/#what-is-margin-in-trading",
          "answer": [
            "When you open a leveraged trade, margin is the deposit your provider holds from your account. It represents a fixed percentage of the total trade size. Once the trade closes, that margin returns to you, minus any loss. Margin isn’t a fee, and it isn’t the most you can lose on the trade."
          ]
        },
        {
          "id": "what-is-leverage-in-forex",
          "question": "What is leverage in forex?",
          "url": "https://thetraderwiki.com/en/leverage-and-margin/#what-is-leverage-in-forex",
          "answer": [
            "Leverage in forex is the same multiple as in any other market, calculated by dividing the size of your currency trade by the margin behind it. The company that opens your account controls how much you can get. Retail clients of EU and UK companies get at most 30:1 on major currency pairs and 20:1 on the rest (ESMA Decision (EU) 2018/796, FCA PS19/18), while global companies offer more. The maximum leverage page explains why the figure in an advert is often higher than the one you get."
          ]
        },
        {
          "id": "what-is-a-margin-call",
          "question": "What is a margin call?",
          "url": "https://thetraderwiki.com/en/leverage-and-margin/#what-is-a-margin-call",
          "answer": [
            "A margin call is a warning from your provider that your equity has fallen close to the margin your open trades need. It asks you to add money or reduce your trades. A call doesn’t always come before a close-out, so a fast market can close your trades with no warning at all."
          ]
        },
        {
          "id": "what-is-free-margin",
          "question": "What is free margin?",
          "url": "https://thetraderwiki.com/en/leverage-and-margin/#what-is-free-margin",
          "answer": [
            "Free margin is your equity less the margin tied up in your open trades. It’s the money you can use to open new trades or to absorb losses on the ones you hold. The other portion is used margin, the sum your provider has set aside."
          ]
        },
        {
          "id": "how-to-calculate-margin",
          "question": "How do you calculate margin on a trade?",
          "url": "https://thetraderwiki.com/en/leverage-and-margin/#how-to-calculate-margin",
          "answer": [
            "Margin on a trade equals its full size times the asset’s margin rate. Full size means the number of units multiplied by the current price. The pips and lots page runs through the formula with examples."
          ]
        }
      ],
      "links": [
        {
          "label": "ESMA Decision (EU) 2018/796",
          "url": "https://eur-lex.europa.eu/eli/dec/2018/796/oj",
          "type": "source",
          "title": "ESMA Decision (EU) 2018/796 of 22 May 2018 to temporarily restrict contracts for differences in the Union",
          "publisher": "Official Journal of the European Union (EUR-Lex)"
        },
        {
          "label": "FCA PS19/18",
          "url": "https://www.fca.org.uk/publications/policy-statements/ps19-18-restricting-contract-difference-products-sold-retail-clients",
          "type": "source",
          "title": "PS19/18: Restricting contract for difference products sold to retail clients",
          "publisher": "FCA"
        },
        {
          "label": "maximum leverage",
          "url": "https://thetraderwiki.com/en/maximum-leverage/",
          "type": "internal"
        },
        {
          "label": "pips and lots",
          "url": "https://thetraderwiki.com/en/pips-lots-and-position-size/#margin-formula",
          "type": "internal"
        }
      ]
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    {
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      "id": "sources",
      "heading": "Sources",
      "url": "https://thetraderwiki.com/en/leverage-and-margin/#sources",
      "intro": [
        "The original documents this page cites, in the order they first appear."
      ],
      "items": [
        {
          "key": "esma",
          "title": "European Securities and Markets Authority",
          "publisher": "ESMA",
          "url": "https://www.esma.europa.eu/"
        },
        {
          "key": "esma-2018-decision",
          "title": "ESMA Decision (EU) 2018/796 of 22 May 2018 to temporarily restrict contracts for differences in the Union",
          "publisher": "Official Journal of the European Union (EUR-Lex)",
          "date": "2018-05-22",
          "url": "https://eur-lex.europa.eu/eli/dec/2018/796/oj"
        },
        {
          "key": "fca",
          "title": "Financial Conduct Authority",
          "publisher": "FCA",
          "url": "https://www.fca.org.uk/"
        },
        {
          "key": "asic",
          "title": "Australian Securities and Investments Commission",
          "publisher": "ASIC",
          "url": "https://asic.gov.au/"
        },
        {
          "key": "esma-product-intervention",
          "title": "Product Intervention",
          "publisher": "ESMA",
          "url": "https://www.esma.europa.eu/policy-activities/mifid-ii-and-investor-protection/product-intervention"
        },
        {
          "key": "fca-ps19-18",
          "title": "PS19/18: Restricting contract for difference products sold to retail clients",
          "publisher": "FCA",
          "date": "2019-07-01",
          "url": "https://www.fca.org.uk/publications/policy-statements/ps19-18-restricting-contract-difference-products-sold-retail-clients"
        },
        {
          "key": "asic-20-254mr",
          "title": "20-254MR ASIC product intervention order strengthens CFD protections",
          "publisher": "ASIC",
          "date": "2020-10-23",
          "url": "https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-254mr-asic-product-intervention-order-strengthens-cfd-protections/"
        }
      ]
    }
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      "title": "Maximum leverage: what “up to 500:1” really means",
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      "blurb": "Why the leverage a provider advertises isn’t the leverage you get, and what you give up to reach it."
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