Best High Leverage Forex Brokers 2020
Online trading has become more accessible for the average person since the rise of the internet. Brokerage houses quickly spotted the opportunity and provided retail traders access to the financial markets via leverage.
Trading financial markets, like the FX market, can be expensive and without leverage simply impossible for the retail trader. Leverage, however, is a double-edged sword – while it enables traders to multiply their position sizes, it also increases the risk involved.
Top Brokers for Leverage
Below is the choice of Forex brokers who provide 500:1 and 400:1 leverage options. Let’s compare!
Do you know another Forex broker that offers the highest leverage of 400:1 or higher?
Please suggest by adding a comment below.
What is Leverage?
Simply put, leverage acts as a multiplier of a trader’s capital. Enabled by the broker, this allows the trader access to markets they would not be able to otherwise trade.
Leverage determines the amount traders move on the actual market. For instance, on a trading account having a leverage of 400:1, traders move on the real market 400 times more than the actual position in their retail account.
How does Leverage work?
The leverage level of a broker is usually expressed as a ratio. It demonstrates a particular percentage of the total available capital that a trader is required to have in their account (e.g. leverage 1:100 requires 1% margin).
Trading with leverage is common and simple as the only requirement is for a margin minimum held by the trader. It establishes the amount of money a broker requires from a trader to open a position and is expressed in percentages.
So let’s look at how leverage trading works:
A trader wants to open a trade with a contract size of 100,000 per lot but does not have the $130,000 to put down.
Using leverage of 1:500, he or she can dramatically reduce the amount of capital required.
$130,000 / 500 (leverage used) = $260.00 required capital
Using this leverage size, we can use a simple formula to work out the amount of investment needed:
Buy trade: Ask price x contract size / leverage
Sell trade: Bid price x contract size / leverage
1 lot = 100,000 contracts (contracts worth is based on the underlying instrument which in this case is GBP)
GBP/USD, 100 000 Contracts are worth 100 000 units of GBP.