Lesson 4 · Basic · 6 min
Trading without leverage: why it is safer
What leverage is, why it is dangerous and how to trade with your own funds.
What leverage is
Leverage is a loan from the broker that lets you open a trade larger than your own funds. For example, at 1:10 you can open a $10,000 position with $1,000.
Why it is dangerous
Leverage multiplies not only profit but also loss. At 1:100 a price move of just 1% against you wipes out the whole deposit.
That is why huge leverage is a favourite trick of dishonest firms: the client loses money fast, and the “broker” profits from it.
Example
Deposit $1,000. Without leverage a 5% price drop is −$50 and you keep $950. At 1:20 the same move is −$1,000 — the whole account.
How we work
By default you trade with your own funds: the trade size does not exceed the money on the account. Leverage is provided only on a separate request, subject to the company’s conditions.
- No loan — no interest and no debt to the broker
- Your loss is limited to the trade size
- Trade size follows your risk, not the leverage
How to choose the size
The Trade value calculator shows what a position costs and how many lots you can open with your balance. Set your risk with a Stop Loss — see lesson 6.
Key takeaways
- Leverage multiplies both profit and loss
- We trade with your own funds
- Leverage — only on a separate request, subject to conditions