How does leverage work?

Any amount of leverage increases your exposure to a financial instrument. If you increase the level of leverage of any trade, it allows you to multiply your exposure to the instrument in proportion to the leverage ratio (for example, X5 as opposed to X2).

The multiplier shows how much buying power you will apply to your initial investment.

If you are considering increased leverage, you must take into account:

• The maximum leverage per type of asset.
• Your own risk tolerance, as the leverage you use can increase potential losses, not only gains.
• Leverage does not change the amount of your own funds you invest, but the trade’s exposure and therefore the number of units in the trade.
• All positions with leverage are traded as CFDs. To know more about CFDs, click here.