What Is Leverage in Forex Trading? How It Works In 2026
BY TIOmarkets
|March 11, 2026Leverage is one of the defining features of forex trading. It allows you to control a position that is larger than the capital you commit, by using a smaller deposit, known as margin, as collateral.
Understanding how leverage works, what it costs, and how it affects your risk exposure is essential before you place a leveraged trade. This guide explains the mechanics of leverage in forex, how margin is calculated, and how leverage is structured at TIOmarkets.
What Is Leverage in Forex Trading?
Leverage in forex trading is the ratio between the size of a position you control and the amount of your own capital used to open it. A leverage ratio of 1:100 means that for every USD 1 of your own funds, you can control a position worth USD 100. A leverage ratio of 1:500 means every USD 1 of your funds controls a USD 500 position.
Leverage is expressed as a ratio (1:100, 1:500) or as a margin percentage. A 1:100 leverage ratio corresponds to a 1% margin requirement. A 1:500 ratio corresponds to a 0.2% margin requirement. The two expressions describe the same relationship from different directions: margin percentage is simply 100 divided by the leverage ratio.
Leverage magnifies both potential gains and potential losses. A 1% move in your favour on a 1:100 leveraged position produces the same profit as a 100% move would on an unleveraged one. Equally, a 1% adverse move on a 1:100 leveraged position produces the same loss. This symmetry is what makes leverage powerful and what makes it risky.
How Margin Works
Margin is the amount of funds your broker requires you to set aside to open and hold a leveraged position. It is not a fee. It is a portion of your account equity held as a deposit against your open trade.
When you open a leveraged position, the required margin is calculated as a percentage of the full notional value of the trade. For most major and minor forex pairs at TIOmarkets, the margin requirement is 1%, confirmed from the TIOmarkets contract specifications. For a 1.0 standard lot EURUSD trade with a notional value of EUR 100,000, a 1% margin requirement means approximately USD 1,000 is required as margin at a rate of 1.00 EURUSD. The exact amount varies with the exchange rate and your account base currency.
Some pairs carry higher margin requirements. Pairs involving the Swiss Franc (USDCHF, AUDCHF, CADCHF, CHFJPY, EURCHF, GBPCHF, NZDCHF) carry a 5% margin requirement. USDCNH and USDHKD carry a 10% margin requirement. These figures are confirmed from the TIOmarkets contract specifications.
While your position is open, the margin remains reserved. The remaining funds in your account, after subtracting margin in use, are your free margin. This is the capital available to open further trades or to absorb losses on existing ones.
Margin requirements are subject to change depending on market conditions and applicable regulatory requirements.
Margin Call and Stop Out
If your account equity falls due to open losses, your broker will issue a margin call when your equity reaches a defined threshold relative to the margin in use. At TIOmarkets, the margin call level is 100% across all account types. This means you will be alerted when your equity equals the margin required for your open positions.
If losses continue and equity falls further, to the stop out level, open positions will begin to be closed automatically to prevent your balance from going negative. At TIOmarkets, the stop out level is 30% across all account types. One exception applies: on the Standard account when using 1:2000 leverage, the stop out level is 40%. These figures are subject to change depending on market conditions and applicable regulatory requirements.
Understanding these levels matters when sizing positions. The smaller the gap between your equity and your margin in use, the closer you are to a margin call. A larger lot size relative to your account balance closes that gap faster.
How Leverage Affects Trading Costs
Leverage does not directly increase the spread or commission you pay, but it does increase the size of your position, which scales your total cost accordingly.
On accounts that charge commission, the Raw and Nano accounts at USD 6 per round turn lot, commission scales with lot size. A larger lot size means a higher commission amount. The full commission is charged when you open the position and covers both the opening and closing of the trade.
Swap costs, the interest debited or credited for holding a position overnight, also scale with lot size. A leveraged position held overnight at a larger lot size will incur a proportionally larger swap debit or credit.
Spreads are variable and typically higher than minimum figures shown. The cost of the spread is also proportional to the lot size you trade.
Leverage at TIOmarkets: Account by Account
TIOmarkets offers different maximum leverage depending on the account type.
The Standard account offers leverage up to unlimited, accessed via MT5 only. This is TIOmarkets' most distinctive leverage feature and is described in more detail below.
The Raw account offers leverage up to 1:500 on request, available on MT4 and MT5.
The VIP Black account offers leverage up to 1:500 on request, available on MT4 and MT5.
The Nano account offers leverage up to 1:500 on request, available on MT5 only.
All leverage figures are subject to change depending on market conditions and applicable regulatory requirements.
Unlimited Leverage on the Standard Account
The Standard account at TIOmarkets offers an unlimited leverage feature, available on MT5 only. Rather than applying a fixed leverage ratio, this feature scales margin requirements dynamically based on account equity.
The margin scaling works as follows, confirmed from the TIOmarkets unlimited leverage page. For account equity between USD 0 and USD 999, no margin is required and leverage is effectively unlimited. For equity between USD 1,000 and USD 2,499, a 0.05% margin requirement applies, corresponding to 1:2000 leverage. For equity between USD 2,500 and USD 4,999, a 0.1% margin requirement applies, corresponding to 1:1000 leverage. For equity between USD 5,000 and USD 19,999, a 0.2% margin requirement applies, corresponding to 1:500 leverage. For equity of USD 20,000 or more, a 0.5% margin requirement applies, corresponding to 1:200 leverage.
This means the maximum practical lot size you can trade is tied directly to your account equity. The combined pip value of all open positions cannot exceed the available equity in your account, minus commissions. For example, if your account equity is USD 500, the maximum lot size you can hold is the equivalent of USD 500 per pip. This also means a one-pip adverse movement across your open positions could result in a loss equal to your entire account equity at that position size.
Restrictions on unlimited leverage:
Only symbols with a "un" suffix in the MT5 platform are eligible for the unlimited leverage feature.
A 0.5% margin requirement applies (equivalent to 1:200 leverage) for positions opened from 15 minutes before to 5 minutes after high-impact news announcements. Margin returns to your account when this period ends.
A 0.5% margin requirement also applies (equivalent to 1:200 leverage) for positions opened from 21:00 Friday to 01:00 Monday, MetaTrader server time. Margin returns to your account when this period ends.
No positive swaps are available on symbols using the unlimited leverage feature.
EA trading is not compatible with the unlimited leverage feature.
The unlimited leverage feature is not available on Raw, VIP Black, or Nano accounts.
The Relationship Between Leverage and Risk
Leverage does not change the pip value of an underlying price movement. What it changes is how large a position you can hold relative to your capital, and therefore how large the financial impact of each pip movement is on your account.
A trader with USD 1,000 using 1:10 leverage can open a position with a notional value of USD 10,000. A one-pip adverse move on a EURUSD position of that size results in approximately USD 1 of loss. The same trader using 1:100 leverage could open a USD 100,000 position. The same one-pip adverse move now results in approximately USD 10 of loss. The price moved by the same amount in both cases. The difference is entirely in position size.
This is why position sizing is inseparable from leverage. Higher leverage does not require you to trade larger positions, but it makes it possible to do so with less capital. Traders who use high leverage with large position sizes relative to their account balance carry significantly more risk of a rapid drawdown.
Orders are executed at the best available market price, which may result in positive or negative slippage. Demo accounts often execute instantly and may not fully replicate live slippage conditions.
Trading Leverage at TIOmarkets
TIOmarkets operates the tiomarkets.com domain under a MISA-regulated entity based in the Seychelles. Leverage is available across all four account types, with the Standard account offering up to unlimited leverage via MT5 and a dynamic margin scaling model confirmed from the TIOmarkets unlimited leverage page. Raw, VIP Black, and Nano accounts offer up to 1:500 on request. Hedging is supported on all accounts. An Islamic (swap-free) account is available for traders who require it; contact TIOmarkets to confirm eligibility and supported instruments. Copy trading is also available.
FAQ
Risk disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Never deposit more than you are prepared to lose. Professional client’s losses can exceed their deposit. Please see our risk warning policy and seek independent professional advice if you do not fully understand. This information is not directed or intended for distribution to or use by residents of certain countries/jurisdictions including, but not limited to, USA & Countries included in the OFAC sanction list. The Company holds the right to alter the aforementioned list of countries at its own discretion.
TIOmarkets offers an exclusively execution-only service. The views expressed are for information purposes only. None of the content provided constitutes any form of investment advice. The comments are made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances, or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval.
Join us on social media
Behind every blog post lies the combined experience of the people working at TIOmarkets. We are a team of dedicated industry professionals and financial markets enthusiasts committed to providing you with trading education and financial markets commentary. Our goal is to help empower you with the knowledge you need to trade in the markets effectively.
Related Posts
