High leverage is extremely useful when trading forex. It allows smart traders to reduce risk by being able to have a larger number of open positions while keeping a lower balance with the broker. Using high leverage can be very risky if done irresponsibly, but when used by skilled traders it is one of the most essential tools in a trader's arsenal.
Finding the balance between high leverage and using a safe broker with low spreads and good execution is very important when choosing your forex broker. We consider high leverage anything above 1:400, so we have analyzed the largest and most trusted global forex brokers with leverage equal or higher than 1:400. We have ranked those brokers based on a complex set of criteria that includes high leverage, but also takes into account other important features such as regulation, low spreads, good execution, allowing scalping, fast withdrawals and more.
Below you can find the top five high leverage forex brokers:
Regulation in some countries and regions such as the United States, the European Union or Japan greatly restricts leverage to very low levels. This is because those regulations are made by adepts of the Nanny State philosophy, which is based on the idea that the government should protect people from themselves. Those who regulated forex brokers in the mentioned jurisdictions think that high leverage entices traders to take a higher risk, so reducing leverage is a safer option for the trader. While using high leverage is obviously more risky, we think it is up to the trader to decide how much leverage he wants to use.
We think of maximum leverage as the maximum speed of a car. Would you like to have a car that has a speed limit of 120 km/h just because in most countries this is the speed limit on motorways? Or would you rather have a fast car that can go upwards of 250 km/h? While in most cases you will never exceed the speed limit of 120 km/h, so the high speed limit of the car will not be used very often, it would be nice to still have the possibility to accelerate to higher speeds in certain circumstances. Maybe you are visiting Germany and want to ride fast on the Autobahn, or you go with your car to a race track. It is always good to have a reserve that allows you to go faster than normal. The same goes with forex brokers and with leverage.
Now, if we think about professional forex traders, they are the equivalent of race drivers. They need high leverage, just as race drivers need fast cars. Our belief is that every trader should have the possibility to use the best tools available to professional traders. If everyone could drive a Ferrari, would you settle for a Kia?
There are many advantages when using a high leverage forex broker. Below are the most evident:
• You can trade higher volumes with a lower deposit amount.
• High leverage allows you to deposit less money with the forex broker, while keeping your savings in a safe bank account and even earn interest. You deposit only what is needed for the margin requirements.
• If you don't want to use high leverage, you can just trade smaller lot sizes. There is nothing stopping you from trading small volumes with a high leverage forex broker, but you cannot trade high volumes with a low leverage broker.
• You can open multiple positions at the same time, hedging your risk and diversifying your trade portfolio, while keeping a lower deposit with the broker.
To sum it up, with a high leverage forex broker you can do the same things you do with a low leverage forex broker while keeping less money in the brokerage account and the difference into your bank account. High leverage means you can do more with less.
High leverage can be very risky for impulsive traders who have little self control, and for people who have the tendency to gamble. This is why regulation in many places limits maximum leverage.
However, if you are an experienced and disciplined trader, high leverage will be very beneficial to you as it will be just another useful tool in your trading arsenal.
The most important rule when it comes to reducing risk in trading remains the classic "never trade with money you cannot afford to lose", as anyone can end up having a bad trading session.
We always advise people to be cautious when using high leverage, and never take unnecessary risks.
Disclaimer: CNIE.ORG is not affiliated with any of the companies presented on this website. We are an independent website and are not liable for any potential loss that you may incur by trading with any of the mentioned brokers. This website is not meant for residents and citizens of the United States or any other country where forex trading is illegal.
Risk Warning: Trading in the forex market using Contracts For Difference, Options, Spread Betting and any other derivative trading instruments implies the risk of losing your entire investment. Derivative instruments are complex financial instruments that may not be adequate for everyone. Anyone who decides to trade using derivative instruments does so at his/her own risk and has full responsibility for the potential losses. The general advice is to never trade with money you cannot afford to lose.
