What is Leverage in Forex?

Example at 1:100 leverage:
- You deposit $500
- Available buying power: $500 × 100 = $50,000
- You buy 0.5 lots EUR/USD (50,000 units) at 1.0850
- Required margin: $500 (your full deposit at 1:100)

Scenario A — Price moves 50 pips in your favor:
- 50 pips × $5/pip (0.5 lot) = $250 profit = 50% return on $500

Scenario B — Price moves 50 pips against you:
- 50 pips × $5/pip = $250 loss = 50% of account gone

At 1:500 leverage:
- Same $500 controls $250,000
- Each pip is worth $25 (2.5 lots)
- A 20-pip move wipes your account if no stop loss

The leverage ratio determines how much a given price move affects your account — not how much the market moves.

| Leverage | Margin Required | $1,000 Controls |
|----------|----------------|-----------------|
| 1:10 | 10% | $10,000 |
| 1:50 | 2% | $50,000 |
| 1:100 | 1% | $100,000 |
| 1:200 | 0.5% | $200,000 |
| 1:500 | 0.2% | $500,000 |
| 1:∞ (Unlimited) | ~0% | Virtually unlimited |

Regulatory caps by region:
- EU (ESMA): max 1:30 on major forex pairs
- UK (FCA): max 1:30
- Australia (ASIC): max 1:30
- UAE / GCC / Southeast Asia: up to 1:∞ (unlimited) via brokers like Exness
- US (NFA): max 1:50

Exness offers unlimited leverage to eligible clients outside EU/UK/AU — one of the highest available anywhere.

The professional approach: Use no more than 1–3% of your account margin on any single trade, regardless of your available leverage.

Practical rules:
- Set a stop loss on EVERY trade — no exceptions
- Risk maximum 1–2% of account per trade
- Calculate your position size based on your stop loss distance, not your full leverage
- Start with 1:10 to 1:20 as a beginner — build discipline first
- Never let one trade represent more than 5% of your account value

Example of correct position sizing:
- Account: $1,000
- Risk per trade: 1% = $10
- Stop loss: 20 pips on EUR/USD
- Position size: $10 ÷ 20 pips = $0.50/pip = 0.05 micro lots

You could use far more leverage — but this sizing keeps your risk controlled regardless.