What is Leverage?

Leverage is the ratio between a trader’s capital and the total value of a trade. It allows traders to control larger positions with a smaller investment, increasing both potential profits and risks.

How Leverage Works

Leverage is expressed as a ratio (e.g., 1:100), meaning:

• With 1:100 leverage, a trader can control $100,000 with just $1,000 in their account.
• This means only 1% of the trade value is required as margin.

Example:

• Deposit: $1,000
• Leverage: 1:100
• Trade Size Controlled: $100,000

Advantages & Risks of Leverage

✔ Increases buying power – Trade larger positions with less capital.
✔ Enhances profit potential – Small price movements can yield higher returns.
❌ Higher risk – Losses are also magnified if the market moves against your trade.

Leverage Limits

Different brokers offer varying leverage options. Some, like Unitedpips, provide up to 1:1000 leverage, allowing traders to maximize position sizes with minimal capital.

Before using high leverage, traders should understand the risk management strategies to avoid excessive losses.