What is Leverage?
Leverage allows traders to control a larger position size with a smaller amount of capital. For example, with 1:100 leverage, a $100 deposit can control a $10,000 position. This magnifies both potential profits and potential losses.
This independent guide explains leverage concepts for educational purposes. Leverage is a powerful tool that must be understood before use. Trading CFDs with leverage involves significant risk and may not be suitable for all investors.
How Leverage Works on Exness
When you open a leveraged position, Exness requires a margin deposit — a percentage of the full position value. The remaining value is effectively borrowed. Margin requirements vary by instrument and account type.
For example, trading 1 standard lot (100,000 units) of EUR/USD at 1:100 leverage requires approximately $1,000 margin. A 1% price movement in your favor yields $1,000 profit (100% return on margin), but a 1% move against you results in a $1,000 loss (100% loss on margin).
Margin Calls & Stop Outs
A margin call occurs when your account equity falls below the required margin level. Exness may automatically close your positions (stop out) when your margin level drops too low to prevent further losses exceeding your account balance.
Different account types and instruments have different stop-out levels. Always monitor your margin level in the platform Terminal window and maintain sufficient free margin. Never risk more capital than you can afford to lose completely.
Leverage Risk Management
High leverage increases the risk of rapid losses. Conservative traders often use lower leverage (1:10 to 1:30) to reduce risk exposure. Always use stop loss orders on every leveraged trade to limit potential losses.
Position sizing is critical: never risk more than 1-2% of your account balance on a single trade. Use a demo account to practice leverage and margin calculations before trading with real funds. Understand that you can lose more than your initial deposit.
Leverage by Instrument
Different trading instruments have different leverage limits. Forex pairs typically offer higher leverage, while commodities like gold and oil, indices, stocks, and cryptocurrencies often have lower leverage limits due to higher volatility.
Leverage limits may also be affected by your account type, verification level, and Exness policies. Always check the current leverage available for your chosen instrument in your Personal Area before trading.