How Does Leverage Work?

The funds you deposit to your trading account is considered your margin. Leverage is a mechanism which allows you to open positions far greater than your initial margin.

For example, if you deposit 10,000 euros to a trading account, and have a maximum leverage of 1:30, your buying power can be potentially as much as €300,000. However, you absolutely should not allocate the entire value of your account to one trade. The higher your exposure is to the market; a small price movement will significantly impact profits or losses.

If for example, you open a long position for 10,000 EUR/USD, €333.33 of your margin will be used, leaving you with €9,666.67 free margin which may be used for other trades or maintained as part of a healthy risk management strategy. 

  • Account Balance 10,000 EUR
  • Leverage = 1:30
  • User Margin 500 EUR
  • Free Margin 9,500 EUR
  • Equity 10,000 EUR
  • Margin Level 2000 %

Used Margin is the amount of margin used to maintain the open CFD position; it’s a static number. However, Free Margin is a dynamic number which adjusts according to unrealised profit and loss. Should the price fall by 300 Pips, the position experience drawdown of $300 (€245.6), which is an unrealised loss, then Free Margin will fall to €9,254.4, supposing the EUR/USD exchange rate 1.22150.

BUY 10,000 EUR/USD
EUR/USD = 1.22150
  • Account Balance 10,000 EUR
  • Leverage = 1:30
  • User Margin 9,500 EUR
  • Free Margin 9,254.4 EUR
  • Equity 9,754.4 EUR
  • Margin Level 102.68 %
ESMA Product
	Intervention Measures

ESMA Product
Intervention Measures

As a European investment firm regulated by the Cyprus Securities and Exchange Commission (CySEC), AFXMarkets follows MiFID II and the rules established by the European Securities and Markets Authority (ESMA), as well as CySEC. Since 1st of August 2018, ESMA has required all EU licensed CFD providers to follow strict conditions concerning how much leverage may be offered to non-professional clients.

Major forex pairs, such as USD/JPY, EUR/USD, GBP/USD 1:30
Minor forex pairs, such as USD/MXN, EUR/CZK, GBP/SGD 1:20
Spot gold 1:20
Major indices, such as the US30, DAX30, FTSE100 1:20
Spot silver 1:10
Futures (hard & soft commodities), such as Copper vs USD or Wheat vs USD 1:10
Energy products, such as Brent vs USD 1:10
Minor indices, such as ASX, HSI 1:10
Shares of US, UK, French & German listed companies 1:5
Digital assets, such as BTC/USD, ETH/USD 1:2

Open a CFD trading
account today

* Start Trading Now.