About the Leverage Calculator
See how much leverage you're really using: the total value of your open positions divided by your account equity. Enter one forex position from its pair and lot size, or the value of several positions, and set the leverage you want to stay under.
This is different from the leverage your broker offers. A broker may allow 1:500, but if you hold one lot of EUR/USD on a $10,000 account you are actually leveraged about 10.85 to 1, and that is the number that decides how hard a price move hits your account.
How it works
A position's value is its size times the price, turned into your account currency. One standard lot of EUR/USD at 1.0850 is 100,000 euros, worth 108,500 dollars. For a pair whose base currency is your account currency, such as USD/JPY in a dollar account, the value is simply the number of units.
Effective leverage is the total value of all open positions divided by your equity (balance plus or minus open profit and loss). With $40,000 of positions on $5,000 of equity, you are at 8:1: a 1% move against all of them costs 8% of the account.
If you set a limit such as 10:1, the page shows the largest total you can hold and how much room is left, or by how much you are over it.
Assumptions and limits
- Hedged positions (a buy and a sell on the same pair) are added up, not netted; enter the net position if your broker nets them.
- Values must be in your account currency. Use the One forex position mode to have the conversion done for you.
- Margin is a separate question: the Forex Margin Calculator shows how much of your money the broker holds for a position.
Worked examples
One lot of EUR/USD
108,500 dollars of position on 10,000 dollars of equity is 10.85:1 leverage.
Three positions
20,000 + 15,000 + 5,000 = 40,000 on 5,000 of equity is 8:1.
Staying under 10:1
With 5,000 of equity the limit is 50,000 of positions; holding 40,000 leaves 10,000 of room.
How to use the Leverage Calculator
- Enter your equity. Balance plus or minus open profit and loss.
- Add your positions. One forex position, or the value of several.
- Read the leverage. And the room left under your own limit.
Frequently asked questions
What is effective leverage in trading?
It is the total value of your open positions divided by your account equity. Unlike the maximum leverage a broker allows, it shows how much your account actually controls, and therefore how much a price move changes your balance.
Is 1:500 leverage dangerous?
The broker's maximum only limits how big a position you can open. What matters is how much you actually use: a small position on a 1:500 account can be leveraged only 2:1, while a large one can wipe the account out in a small move.
How do I calculate leverage for one trade?
Divide the position's value by your equity. One standard lot of EUR/USD at 1.0850 is worth about $108,500, so on a $10,000 account the leverage is 10.85:1, and a 1% move changes the account by about 10.85%.
What leverage do professional traders use?
Many professional and fund traders keep effective leverage low, often under 10:1 and frequently far less, because a few percent of adverse movement at high leverage can cause losses they can't recover from. The right level depends on your strategy and stop losses.
What is the difference between leverage and margin?
Margin is the deposit a broker holds to keep a position open, worked out from the broker's leverage. Effective leverage compares the whole position to your equity. You can use little margin and still be highly leveraged.
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