Lesson B1 · Part B: Mechanics4 of 107 min
Leverage and margin, honestly
Leverage lets a small deposit control a large position. It magnifies losses exactly as much as gains.
§1Margin is a deposit, not a cost
When you open a leveraged trade, the broker sets aside part of your balance as margin. At 1:30 leverage, a $30,000 position needs $1,000 of margin.
If losses eat into your account so far that you can't support the margin, the broker will issue a margin call and may close positions automatically (a stop-out).
§2Leverage changes the size, not the odds
A 1% move against a 1:30 position is a 30% loss of the margin used. Leverage doesn't make a trade more likely to win — it only makes the outcome bigger.
Professionals think in risk per trade (see Part D), and let position size, not maximum leverage, decide how much they control.
01Position: 1 mini lot EUR/USD = 10,000 € ≈ $10,850
02Leverage 1:30 → margin = $10,850 ÷ 30
03Margin required ≈ $361.67
remember this:
- Margin is the collateral held while a trade is open.
- Higher leverage = smaller moves can wipe out your margin.
- Size positions by risk, not by how much leverage is available.
Checkpoint
Q1.With 1:50 leverage, how much margin does a $50,000 position need?
Q2.What does higher leverage change?