Financial Leverage

Traders around the world engage their resources and knowledge in creating efficient investment plans to use in markets worldwide. Forex, cryptocurrencies, commodities—each market has its own characteristics, and every trader must know how to act in order to maximize the benefits from any operation. In addition to accurate analysis, risk management functions, and other fundamental factors for strategy creation, one of the most used tools to increase profit probabilities is financial leverage.

But what is financial leverage? By definition, financial leverage is a tool that allows the trader to increase market exposure despite only committing a small amount of capital. In practice, using financial leverage, it is possible to invest larger volumes than the actual capital invested. The amount that the trader decides to invest is called “margin,” which is the portion of funds required to be deposited to open a leveraged position.

This is how it works: using financial leverage allows the trader to make high-volume investments while committing small amounts of money. When opening a position, the client only needs to pay a small portion of the total value. The remaining part of the capital will be lent by the broker.

Despite the actual amount invested, any profits will be calculated on the entire position. Consequently, a potential gain will be much higher compared to the amount invested. It is necessary to remember that although this can significantly amplify profits, it can also, equally, increase losses.

For example:

If opening a certain position requires a margin of 10%, it means that the trader can commit $100 on a total investment of $1000. The financial leverage will consequently be ten times the value: 10:1.

• Assuming the trader buys 1000 shares of XXX Spa with a unit value of one dollar, the entire operation would cost $1000. If the value increases by 20 cents per share, the client can close the position at $1200 (1000 shares at $1.2 each), thus realizing a profit of $200 (a gain of 20%).
• The broker proposes the client purchase 1000 shares of www Spa using financial leverage. The client only needs to pay a portion of the funds necessary for the entire investment (i.e., a percentage of the total sum of $1000). The required margin is 10% (thus the trader only needs to pay $100 against the total investment): 10% x $1 x 1000 shares = $100. The price of the shares rises to $1.2 and the trader makes a profit of $200.
• Even though in both cases the trader realized the same profit, with the use of leverage, they only had to invest $100 instead of $1000. A return of 100%, much higher compared to an operation without the use of leverage.

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FxPro Dynamic Leverage

A popular international broker, FxPro is a giant in the sector that has literally revolutionized trading with financial leverage. To meet client needs, the broker has created a flexible, advantageous, and highly secure tool: dynamic leverage.

Unlike ordinary leverage models, dynamic leverage automatically varies based on the positions opened by the trader. In practice, as the invested volume increases, the set financial leverage automatically decreases. This fully automated mechanism allows the trader to protect themselves from too high losses. Available on FxPro platforms, MT4, and MT5.

Trade with FXPro’S Dynamic Leverage

Maximum Leverage Offered

The broker offers traders extremely high leverage. Each instrument corresponds to a certain level of financial leverage.

1. Forex on Major Pairs: 1:1000
2. Forex on Minor Pairs: 1:500
3. Spot on Precious Metals (Gold, Silver, Platinum, and Palladium): 1:888
4. Spot on Base Metals (Aluminum, Copper, Lead, and Zinc): 1:40
5. Spot on Major Indices: 1:500
6. Spot on Minor Indices: 1:100
7. Index Futures Contracts: 1:50
8. Spot on Energy (USA Oil, UK Oil, Natural Gas): 1:200
9. Commodity Futures: 1:50
10. All Stocks: 1:25
11. Cryptocurrencies: 1:200

Using the most suitable leverage for one’s needs is essential to be able to take full advantage of operations. The use of high leverage can cause both great losses and high profits. Being able to manage the leverage to use wisely and accurately is vitally important for an optimal trading experience. FxPro offers a flexible service that allows the trader to set the level of leverage compatible with their modus operandi with extreme simplicity. Just access FxPro Direct, view the account settings, and change the financial leverage.

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Frequently Asked Questions on FxPro Leverage

What is and how does FxPro’s Dynamic Leverage work?

Available on MT4 and MT5 platforms, dynamic leverage is a tool that varies as the volume of investments changes. If the position volume increases, the set financial leverage decreases automatically.

What are the advantages of using leverage?

By using financial leverage to invest, the trader will have the opportunity to open high-volume positions while committing small sums. This could significantly increase earnings, given the small amounts of capital invested. However, be aware, financial leverage can cause both great gains and great losses.

How is financial leverage calculated in trading?

Financial leverage is usually presented as a percentage (margin requirement) or as a ratio (1:20, 1:50, etc.). Opting for financial leverage of 1:50 (equivalent to a margin requirement of 8%), the client must have a fund deposit equal to 8% of the total value of the investment. For example, to open a position of $100,000 with a margin of 4%, the trader must have a minimum deposit of $4,000.

How to change the financial leverage on your FxPro account?

To change the available leverage, simply enter your FxPro Direct, go to the account settings page, click on “change financial leverage,” set it according to your needs, and click “save.” It is important to remember that the financial leverage cannot be changed if there are open orders.