What is Leverage?

Leverage is one of the key components behind trading Forex. It is expressed as a ratio and works directly in hand with the margin which is set by FP Markets. FP Markets’ standard leverage on accounts is 100:1 and therefore by opting to have greater leverage e.g. 200:1 the margin required to open and hold a Margin FX contract drops (in this case by half). For this reason margin based trading can be an attractive tool for clients to gain greater exposure to the Forex market. Of course in additional to greater profit potential, you will also face the risk of losing more so it is important to assess your personal risk appetite.

At FP Markets we have specific leverage bands in place to assist in determining the leverage a client is allowed on their trading account. The below table is there to guide you on the available leverage options.

See an example of how Leverage works

Example: Trader A has $5000 USD – has $5000 USD – If Trader A has an account leverage of 10:1 and they wish to use $1000 on one trade as margin, they will have exposure of $10,000 in base currency ($1000) = 10 x $1000 = $10,000 (trade value). 

10k

 

Example: Trader B has $5000 USD – has $5000 USD – If Trader B has an account leverage of 100:1 and they wish to use $1000 on one trade as margin, they will have exposure of $100,000 in base currency ($1000) = 100 x $1000 = $100,000 (trade value).

100k

How to check your leverage in MT4

To check what leverage you are currently permitted simply go the navigator and click on ‘Accounts’ and then hover over your account number. You should then see the image below which shows your leverage and base currency.

Leverage

 

MT4 Leverage Conditions

     Leverage     
       Minimum Deposit      
     Maximum Equity Balance     
500 : 1 $500 $5,000
400 : 1 $500 $10,000
300 : 1 $500 $50,000
200 : 1 $500 $100,000
100 : 1 $100 $100,000+
50 : 1 $100 $100,000+
25 : 1 $100 $100,000+
1 : 1 $100 $100,000+

 

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Need Assistance?

If you require information about any of the products or services we offer, please don’t hesitate to contact a First Prudential Markets representative on 1300 376 233 (Aus) / +61 2 8252 6800 (Int)  or Email Us.