Costs & risk

Leverage

Leverage lets you open a position larger than the money you put up as margin, shown as a ratio such as 1:100. It magnifies both gains and losses in the same proportion. NextTrade offers leverage of up to 1:1000; the maximum depends on the instrument.

Also called: gearing, trading on margin, leveraged trading

Hypothetical example

Hypothetically, at 1:200 a position of $50,000 (0.5 lots of EUR/USD) needs $250 of margin. A 20-pip move is then a $100 gain or loss: 40% of the margin used.

Used in these guides

Costs & risk8 min read
Margin call and stop out: how they work
How margin level is calculated, when a margin call or a stop out happens, and what each one does to your open positions.
Costs & risk8 min read
Position sizing: how to work out how many lots to trade
A step-by-step method for setting the size of a trade from the amount you are prepared to lose, your stop loss and pip value.
Basics8 min read
What is forex and how does it work?
How the global currency market works, how a forex trade is priced, and the risks that come with trading it.

Back to the glossary

Risk Warning: CFDs are complex instruments and come with a high risk of losing money.

Leverage

Hypothetical example

Related terms

Used in these guides

Margin call and stop out: how they work

Position sizing: how to work out how many lots to trade

What is forex and how does it work?