Education6 min read

Understanding Leverage in CFDs: A Beginner Guide

Leverage is the biggest advantage and biggest risk in CFD trading. Learn how it works from first principles. What leverage really does to risk, in worked.

What Is Leverage?

30:1 leverage means $3,333 controls $100,000. Your profit/loss is based on the full $100,000 position.

Choosing Your Leverage

  • Beginner: 5:1 effective
  • Intermediate: 10:1 max
  • Advanced: rarely exceed 20:1
  • Effective leverage = position size / account equity

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Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70-80% of retail investor accounts lose money when trading CFDs. Backtesting does not guarantee future results. Always consider whether you can afford the potential loss of your capital.

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