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Maximum leverage for CFDs at FXCM explained

Your expert
Tamás D.
Fact checked by
Adam N.
Updated
Jan 2024
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What is the maximum leverage for CFDs at FXCM as of January 2024?

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.

On BrokerChooser, all the brokers you see have at least one top-tier regulator, which means that in general, standard leverage limits will apply: this means that at FXCM, CFD leverage limits currently range from 30:1 to 2:1, depending on the underlying product.

  • Most jurisdictions, including the EU, the UK and Australia, have standard strict limits on maximum leverage for CFDs.
  • These restrictions apply to retail traders and differ based on the underlying product (forex, stock, stock index, etc.).
  • In some areas, such as the US and Hong Kong, CFDs are banned completely.
  • With CFDs it is important to manage your risk smartly, for example by checking whether you can set leverage manually.
  • At BrokerChooser, we exclusively recommend providers regulated by trusted top-tier authorities, ensuring the legitimacy of these brokers.

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 FXCM.

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73% of retail CFD accounts lose money

Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% 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 FXCM

One of the main 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 maximum leverage allowed for CFD trading depends on the regulatory authority that oversees the financial markets of a given country or region. 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 FXCM's top-tier regulators, along with the current standard leverage limits, depending on the type of CFD.

FXCM 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 FXCM's FCA-regulated entity, you will not be able to trade crypto CFDs.
Regulators and CFD leverage limits at FXCM
🏛️ Top-tier regulators FCA in the UK 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 January 24, 2024

FXCM 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. The latter means that you would not enjoy the same safeguards as at regulated brokers, such as investor protection and negative balance protection.
  • Banned countries: some countries or regions have a full ban on CFD trading, which usually apply to tax residents of the given country, regardless of where they live or trade. 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. However, be aware that this will significantly increase your trading risk, so be sure you are able and ready to handle that. 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.

Read more about how CFDs are regulated worldwide.

Can you set leverage manually at FXCM?

While maximum leverage restrictions are in place for strictly regulated brokers, it is not always possible for clients to change the leverage amount, 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 FXCM falls into:

Unfortunately, FXCM does not give the option of changing the automatically set level of your leverage. Make sure to use some other risk management tools to keep your risks in check.

Note that even if you cannot reduce the amount of leverage from the maximum, you can still control your risk by using what is called position sizing. This risk management technique involves determining the appropriate size of a position based on your account size and risk tolerance. So if leverage is higher, you should put up a lower amount of your own money to keep your risk limited.

How leverage works in CFD trading

Leverage allows you to trade CFDs with a smaller investment, allowing for larger trading positions. It has the potential to amplify both your profits and losses, making it a double-edged sword. 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.

How to manage risk in CFD trading?

There are several steps you can take to limit your risk associated with leverage. Here are some tips.

  • Heed risk warnings: all regulated CFD brokers must carry a risk warning, which shows the share of investors that lose money with CFD trading at that broker. Beginners especially should take this figure (which is generally around 70-80%) seriously. In our experience, beginner CFD traders lose all their money in about 3 months when they start out.
  • Establish realistic objectives. Conduct thorough research on the underlying asset and market, while also being mindful of your own behavior to avoid being carried away. Determine a profit target based on your analysis.
  • Use stop-loss orders, which automatically close your position if the price of the underlying asset moves against you by a specific amount. This approach helps limit potential losses.
  • Have a diversified portfolio: This is Investing 101, but is worth highlighting: don’t put all your eggs in one basket.
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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.

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Further reading

Author of this article

Tamás Deme

Investments • Stock market • Financial journalism

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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