Forex Leverage 1:500 - Forex Trading Leverage
Leverage in Forex trading is the capacity to control a larger value of a Forex pair without increasing the sum used to trade it. Traditionally Forex has had available leverage which can be relatively high. Some of the highest leverage available is typically around 1:500. It is possible to find leverage higher than this.
It should be noted that increasing leverage increases risk. This is because larger trade sizes of Forex have a larger pip value. The pip value is the unit value of each move the pair makes up or down. Even if the trader has the direction right (and therefore each pip value is a gain with each move), Forex has complex moves, which are not typically solely in one direction.
Thus moves against the traded direction are to be expected. This means that larger pip values can result in larger sums being taken from the account as the trade proceeds. With sufficient capital this may be sustainable, but smaller account sizes may find issues in managing these kinds of adverse moves. In effect leverage can accelerate the effect of the movement in value of a Forex pair in the trader's account. What this means is that leverage needs to be balanced with the amount of capital in the trader's account. The brokers in the table below offer leverage up to 500:1 to trade Forex.
