How much forex leverage? The legal caps and the 2% problem
What this video covers
US and EU retail leverage caps side by side, and the arithmetic of why a 2% move wipes out margin at 50:1. The point: position size and stops control risk, not the broker’s maximum.
Sources and the longer explanation: How Much Leverage Should I Use in Forex?.
Numbers shown on screen
- US, major pairs: 50:1
- EU, major pairs: 30:1
- US, other pairs: 20:1
- EU, non-majors: 20:1
How the visuals were made
In 0:49 the video moves through 7 scenes, including a bar chart, “Maximum retail leverage”; a worked formula card (2% move × 50 = 100% of margin); a checklist, “What actually controls risk”; a worked formula card (1 ÷ 2% = 50:1 · 1 ÷ 5% = 20:1); a checklist, “Size first, leverage second”. All graphics were rendered frame by frame by UXS; no stock footage, logos or faces are used.
Chapters
- 0:00 Maximum retail leverage
- 0:09 Why 50:1 is fragile
- 0:15 1:500 offshore? No such protections
- 0:19 What actually controls risk
- 0:25 Margin and leverage are two sides of one rule
- 0:36 Size first, leverage second
- 0:44 Risk note
Transcript
US rules cap retail forex leverage at 50:1 on major pairs and 20:1 on others. The EU caps majors at 30:1.
At 50:1, a 2% move against you wipes out 100% of your margin.
Offshore offers of 1:500 or more come without these protections.
So control risk with position size and a stop-loss, not with the broker's maximum.
Those limits come from margin rules. US dealers must collect at least 2% of notional on majors and 5% on other pairs, which equals 50:1 and 20:1.
A practical check: decide your dollar risk first, set the stop, calculate the size, and if the implied leverage is above 10:1, reconsider.
Educational only, not financial advice.