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Maximum leverage for CFDs at eToro explained

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Tamás D.
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What is the maximum leverage for CFDs at eToro as of February 2024?

One of the key advantages of trading CFDs (Contracts for Difference) is that you can use leverage to potentially earn larger profits with a smaller investment. However, leverage can also amplify your potential losses, which is why CFDs are a high-risk form of trading.

The amount of leverage you can use for trading CFDs largely depends on the regulatory body overseeing the financial markets in a particular country or region.

At BrokerChooser, we only feature brokers regulated by top-tier authorities, which means leverage limits will apply. As a result, for eToro as well CFD leverage limits range from 30:1 to 2:1, depending on the underlying product.

  • Various jurisdictions, like the EU, UK, and Australia, have implemented strict limits on maximum leverage for CFDs.
  • These restrictions primarily apply to retail traders and vary based on the underlying product.
  • In the US and Hong Kong, CFD trading is completely prohibited.
  • When trading CFDs, it's essential to smartly manage your risk. For instance, you can check if you have the option to manually adjust the leverage.
  • We at BrokerChooser only recommend regulated brokers, to ensure the legitimacy and trustworthiness of these platforms.

Make sure you understand and are aware of the risks of CFD trading and know how to manage them. If you are confident in your knowledge, you should have no worries about trading CFDs at eToro.

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Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Regulation and CFD leverage limits at eToro

The maximum leverage allowed for CFD trading depends on the regulatory authority that oversees the financial market in that specific country. Different regulators have different rules and restrictions in place to protect retail investors, but most top-tier regulators (e.g. in the EU, UK and Australia) have standard limits for the maximum leverage for trading CFDs.

In the table below, you can see eToro's top-tier regulators, along with the current standard leverage limits, depending on the type of CFD.

eToro has a license in the UK and is regulated there by the Financial Conduct Authority (FCA), the UK regulator. Be aware that cryptocurrency CFDs are banned in the UK, meaning that if you will be a client of eToro's FCA-regulated entity, you will not be able to trade crypto CFDs.
Regulators and CFD leverage limits at eToro
🏛️ Top-tier regulators FCA in the UK, SEC in the US, and ASIC in Australia
💱 Major currency pairs (e.g. EURUSD, USDJPY) 30:1 leverage
📈 Minor currency pairs (e.g. CHFJPY), gold and major stock indexes (e.g. S&P500) 20:1
🌾 Commodities other than gold and minor stock indexes 10:1
📊 Individual stocks 5:1
₿ Cryptocurrencies 2:1, banned in the UK

Data updated on February 16, 2024

eToro regulators

Here are some other details that are worth knowing with regard to CFD leverage limits:

  • Watch out for higher leverages: if you encounter a broker that offers higher leverage for CFDs than those listed above, your alarm bells should go off. Higher leverage likely means the broker is either violating applicable regulation or is not regulated, which could signal it lacks investor protection schemes.
  • Banned countries: some countries or regions have a full ban on CFD trading, or partly ban CFD trading for particular assets, which usually apply to tax residents of the given country. Some examples include the US, Hong Kong and Belgium.
  • Leverage limits apply only to retail traders. The restrictions listed above refer to retail clients of brokers. It is possible to apply to be categorized by your broker as a professional trader - if approved, your CFD leverage limits will be raised, in some cases as high as 500:1 or even 1,000:1 for some products. Don't be pressured into this step, even if a broker tries to push you aggressively to become a professional trader. This behavior itself should also be a red flag.

CFD trading can have a big emotional impact on traders: especially because of leverage, it can give you, the trader, big emotional highs if you make a profit, and quite deep lows if you lose. It is also a fast-moving form of trading: unlike, for instance, investments in ETFs or stocks, things with CFDs can change quite dynamically. It's crucial to remain mindful of your emotions while trading and avoid becoming entangled in them when making decisions about trading positions. That should be based on cool-headed calculated analysis and risk management strategy.

You can also mitigate your risk by having a diversified portfolio, using stop-loss orders, setting clear trading objectives and taking risk warnings seriously.

Read more about how CFDs are regulated worldwide.

Can you set leverage manually at eToro?

While maximum leverage restrictions are in place for strictly regulated brokers, it is not always possible for clients to change the size of the leverage used, as the broker will set the default to the maximum. However, certain brokers allow users to manually adjust (reduce) the leverage size, which gives you an added tool to manage your risk by helping to limit losses.

Let's see which category eToro falls into:

Good news! eToro gives you the choice to set your leverage level manually.

How leverage works in CFD trading

Leverage allows you to trade CFDs with a smaller investment, and take larger trading positions. It has the potential to amplify both your profits and losses, therefore caution is advised when using leverage.

Let's see an example of how leverage works in CFD trading!

  • Let's say you want to trade a CFD on a stock with a current price of $100 per share. The broker offers leverage of 5:1 for this particular stock.
  • With leverage: With a leverage ratio of 5:1, you can control a position size that is five times your account balance. In this case, your account balance is $1,000, so with leverage, you can control a position size of $5,000 ($1,000 * 5).
  • If there is a price increases by 5%, your profit on the leveraged trade would be $10 000 x 0,05 = $500
  • However, potential losses can also be multiplied with leverage.
  • It's important to consider the impact of any trading costs, such as commissions, spreads, or margin rates, as they can affect your overall outcome. These costs can reduce your profits or add to your losses.
  • Remember to carefully review and understand your broker's specific terms, conditions, and associated risks related to leverage before engaging in leveraged trading.

If you're interested in understanding the intricacies of leverage in CFD trading, read our expert article to learn more about the potential risks and rewards.

Looking for a CFD broker?

If you are looking for the brokers that offer the best CFD trading conditions, check our top recommendations of the best CFD brokers in the world.

Read Best CFD Brokers article

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Author of this article

Tamás Deme

Money Story Magician | Investment • Stock market • ETFs

With over two decades of experience as a financial journalist, proofreader, copy editor, and editor, my mission revolves around making financial knowledge accessible to all. I firmly believe in the power of clear and straightforward writing. My past roles include contributing to Interfax news agency and covering M&A deals for EMIS DealWatch.

Everything you find on BrokerChooser is based on reliable data and unbiased information. We combine our 10+ years finance experience with readers feedback. Read more about our methodology.

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