Best High Leverage Forex Brokers
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The forex market consists of investors and companies with various trading powers. Before more retail clients could access forex, only the large commercial banks were trading with astronomical-size pockets.
This group in the market still exists, but the average Joe can now also participate with much lower capital thanks to the high leverage. Forex is the highest leveraged financial instrument, which is one of the main reasons it’s immensely popular worldwide.
While most derivatives typically never go above 1:100 in leverage, it’s not uncommon for forex brokerages to offer well above 1:500. This substantial margin means new traders can start trading currencies with far less capital, which is another motivation.
Brokers have seen the number of new speculators coming into the industry and do their best to be amongst the high leverage forex brokers. With this in mind, it’s still crucial to ensure one trades with reputable and regulated forex brokers with high leverage rather than fly-by-night firms.
Fortunately, this article provides 5 of these brokers (with a bonus for US clients) and a detailed guide about how leverage works, the pros and cons of high leverage, and how to choose the best forex broker.
Top 5 Regulated Forex Brokers With High Leverage
FXTM
Founded: 2011
Location: Cyprus
Currency Pairs: 21
EURUSD Spread: 0 pips
Leverage: Up to 1:2000
FXTM or Forextime is not just a specialist in offering forex instruments, but also various other CFDs as well since 2011. The broker has thrived in providing impeccable trading technology, including one of the industry’s most recognized social trading platforms.
This is an in-demand product for new investors or those who prefer to take the back seat and let experts grow their accounts. For more active traders, one will receive tight spreads, low-latency execution, consistently favorable trading conditions, responsive customer support, and paying out withdrawals without any back and forth.
Pros
- Licensed by more than one regulator
- Reasonable minimum deposit for most accounts
- Many funding choices available
- Wide range of forex pairs
- Offers cash rebates
Cons
- High minimum deposit for zero spread account
- Charges an inactivity fee
Read more about FXTM in this review
FBS
Founded: 2009
Location: Cyprus
Currency Pairs: 44
EURUSD Spread: 1.1 pips
Leverage: Up to 1:3000
FBS began operations as far back as 2009 and now has over 16 million clients in over 150 countries globally. Part of the reason they boast such a reach is providing a plethora of accounts, from standard, zero spread, and ECN for experienced traders to micro and cent for newbies.
They offer competitive trading conditions catering towards all strategies with no limits on popular trading applications. Clients can also trade metals, indices, stocks, and energies under FBS and experience the same type of impeccable service.
Pros
- More than ten years of industry experience
- Regulated by CySEC
- Wide range of funding and payment options
- Offers nano and zero spread account
- Provides access to some of the highest leverage in forex
Cons
- High spreads for standard account
- Limited selection of forex pairs
- High minimum deposit for zero spread account
Read more about FBS in this review
HotForex
Founded: 2010
Location: Mauritus
Currency Pairs: 49
EURUSD Spread: 1.2 pips
Leverage: Up to 1:1000
HotForex is one of the leading Cyprus-based derivatives brokers in the world. They have lived up to their slogan of Honesty, Openness, and Transparency (HOT) in the 11 years they’ve been in operation.
With more than 45 industry awards won, over 2 million live accounts opened, licenses by some of the most recognized regulators, and various prestigious sports sponsorships, HotForex has been a credible and well-approved name for years.
Aside from the high leverage, clients can enjoy a selection of 1200 markets in popular instruments like shares, indices, metals, commodities, energies, and bonds. Backed by competitive, in-demand products and superior customer service, HotForex is one of the most accessible brokers in the industry.
Pros
- Multi-regulatory status
- Offers different trading accounts
- Does not charge fees for depositing or withdrawals
- Extensive range of forex instruments available
- Offers decent educational resources
- Offers zero spread account
Cons
- Charges an inactivity fee
- Has offshore regulators
Read more about HotForex in this review
XM
Founded: 2009
Location: Cyprus
Currency Pairs: 55
EURUSD Spread: 1.7 pips
Leverage: Up to 1:888
XM is another Cyprus-based globally recognized derivatives broker. The company was started in 2009 and caters to both retail and professional clients in most corners of the globe. Traders can trade confidently with a multi-regulated brand providing an extensive selection of securities, multi-language customer support, and overall brilliant trading conditions.
XM is one of the few reputable brokers offering a no deposit bonus of $30 for first-time customers. This means traders can try the broker’s services risk-free with no obligation while also providing themselves a bit of incentive.
On the whole, XM offers everything the modern trader needs hassle-free.
Pros
- Regulated by various regulatory bodies
- $30 no deposit bonus for new customers
- Offers cent account
- Fee-free funding
- Wide range of base account denominations
Cons
- Applies an inactivity fee
- No zero spread account available
Read more about XM in this review
Fort Financial Services
Founded: 2010
Location: Belize
Currency Pairs: 50
EURUSD Spread: 0.3 pips
Leverage: Up to 1:1000
Fort Financial Services started in 2010 and has been an esteemed name for beginner and advanced traders in most countries ever since. The broker offers a myriad of accounts like cent, standard, fixed, no swaps, and copy trading, catering to active and non-active traders.
Clients can trade forex, stocks, commodities, indices, and cryptocurrencies with competitive execution and trading costs on popular trading platforms. These attributes make the broker a fort in the industry for more than a decade.
Pros
- Offers unlimited leverage
- Has different accounts
- Offers 10% compensation for any losses on their Newbie account
- Fee-free deposits and withdrawals
- $5 minimum deposit on nearly all their accounts
Cons
- Regulated by an offshore regulator
Read more about FortFS in this review
Best High Leverage Broker For US Clients: Forex.com
Founded: 2001
Location: USA
Currency Pairs: 55
EURUSD Spread: 0.6 pips
Leverage: Up to 1:400
US clients have a limited list of forex brokers they can choose from due to the strict regulations in the country. Moreover, the maximum leverage a client can receive is 1:50. Rather than opting for offshore brokers, US clients could consider Forex.com, a National Futures Association-regulated broker.
Forex.com has been in business since 2001 and offers the maximum leverage. The broker is now a subsidiary of the NASDAQ-listed financial services group StoneX Group Inc., making them more reputable and highly capitalized to serve US traders.
Their namesake shouldn’t fool anyone as the broker offers over 4500 markets in indices, equities, commodities, and digital currencies. Along with overall cost-effective trading costs – including fee-free deposits and withdrawals – and world-class, Forex.com is the exclusive broker of choice for American residents.
Pros
- Holds multiple regulatory licenses
- Has been in business since 2001
- Offers several accounts
- Large choice of forex pairs available
Cons
- Limited funding options
- Does not provide Islamic account
- Levies an inactivity fee
Read more about Forex.com in this review
What is leverage in forex?
Leverage is a mechanism in forex allowing traders to ‘gear’ their accounts to control a significantly larger position than they would on a 1:1 basis. Much of the literature refers to leverage in forex as borrowing funds.
While this sentiment is technically correct due to the interest rate or swap differences between currencies, at its core, leverage doesn’t function like a typical financial institution loan.
Any profits or losses resulting from a leveraged trade do not leave the investor liable to their broker aside from spreads, commissions, and swaps they would have already taken. One of the cliched statements of leverage is it being a double-edged sword in that it can equally magnify gains or losses.
For instance, the chance to make a 10% gain in one day is feasible, though simultaneously, losing the same percentage in the same magnitude is likewise possible. Fortunately, clients can choose the desired leverage depending on what their broker offers and can also lower or increase it at certain times.
Before we look at an example of how leverage works, we need to understand the different position sizes in forex. For retail trading, traders buy or sell specific units of a base currency (the symbol on the left of a pair), which have the following names:
- Standard lot (100 000 units)
- Mini lot (10 000 units)
- Micro lot (1 000 units)
- Nano lot (100 units)
Let’s look at a scenario. If one looked to open a sell order worth one mini lot (10 000 units) on EUR/USD at 0.800, they would need to have $12 500 in their account without leverage. Now if a broker offered 1:100, the required deposit or margin becomes 100 times less ($12 500 divided by 100), resulting in a new balance of $125.
This would now allow the trader to make the same gain as they would with $12 500, but it would also mean their losses will be equally larger as well. Let’s assume they risked 50 pips on this trade.
At this EUR/USD price of 0.80, each pip – the smallest price change in the exchange rate – would be worth $1.25 for a mini lot. Therefore, the amount at risk is $62.5. As we can see, $62.5 is almost half $120, which is a lot to lose potentially.
However, concurrently, if the trade were to go over 50 pips in their favor, they could bank $62.5. This is where the ‘double-edged sword’ narrative comes in with forex.
Let’s go over another brief example. If a trader wanted to open a standard lot (100 000 units) buy order on USD/CAD at 1.25, they would ordinarily need $80 000. If a broker offered 1:200 leverage, the investor can put down at least $400 (80 000 divided by 200) in their account and open the same position size.
If they risked 30 pips with each pip being worth $8 at this USD/CAD exchange rate, they could either gain or lose $240, depending on where the price went.
What’s crucial to note is the value for each pip varies from pair to pair. The minimum position size with most brokers for trading forex is 0.01 (micro lot), and many of them provide the same minimum to maximum leverage for virtually all currencies.
Pros and cons of trading with high leverage
Pros
The biggest attraction is its ability to maximize gains over a short period with a proportionally smaller balance. Some experienced traders purposefully do not keep all their disposable income in their accounts.
They do this not to expose their total equity to slippage risks and allows them to perform precise position sizing without putting down their true risk capital. The second advantage is, depending on the interest rate differentials between currencies, traders could also earn positive-yielding swaps for each day they hold positions overnight.
Cons
The drawbacks are pretty much the opposite. As briefly mentioned, high leverage amplifies losses to the point of a possible margin call or a total blow-up. It’s a known fact one of the reasons traders lose money is due to over-leveraging or by using much higher leverage in relation to their capital.
Secondly, though positive swaps are possible if the interest rate yield favors the position, the opposite is also true. This means a trader may incur costs the longer they hold their trades overnight. Thirdly, the spreads and any other commissions (if applicable) can also quickly increase.
How to use leverage to your advantage
When used correctly, leverage can vastly increase trading power and profits, often with reduced monetary risk. This attribute is beneficial, especially in forex, where the average daily price increments are relatively small.
So, naturally, an intelligent and risk-conscious trader plans to maximize their profit potential by holding their positions for long to gain from the highest price change possible. Leverage is advantageous when one understands and recognizes the conditions they’re trading in.
For instance, a trend trader should determine accurately whether the market is trending than ranging. Effectively, everyone is using some form of leverage when executing a position. So, the most effective method of taking advantage of this is identifying the current conditions and aligning that with the appropriate strategy.
Leverage itself isn’t necessarily dangerous. What’s more important is traders employing solid money management and being comfortable with the real monetary value at risk on a per-position basis.
How to choose the best high-leverage forex broker
Choosing the best forex broker involves a thorough process of looking at a few factors:
Regulation
Luckily, all the brokers on this list are regulated; many are licensed by more than one regulator. This is often the first point of consideration for customers viewing a new broker. A licensed entity ensures financial trust, capital security, and consistently practicing fair trading conditions for clients.
Regulated brokers are usually mandated to have segregated accounts and insurance policies for certain regions
Available leverage and policy
While all the brokers in this article offer quite high leverage, they may reduce it in certain regions because of the laws. As briefly mentioned, American residents cannot receive leverage greater than 1:50.
In March 2018, ESMA (European Securities and Markets Authority) mandated brokers from the European Union to offer a maximum leverage of 1:30 for clients living in this region. These two restrictions are the most notable for margin in the forex industry overall, meaning traders from these countries need to allocate much more capital than others.
Something else many traders might not know is the different policies brokers apply for leverage. For instance, certain brokers use a model automatically adapting to their clients’ positions.
This may involve decreasing the maximum leverage as the volume per pair increases. Each broker will also have various margin call and stop-out percentage levels, the average being 40% and 30%, respectively.
Lastly, most brokers may limit the number of times their clients can increase or decrease leverage per account. Therefore, these are some of the policies customers must note beforehand.
Negative balance protection
Negative balance protection is a feature available with nearly all forex brokers ensuring traders’ accounts never fall below zero or a negative balance. Although the automatic stop-out level performs a similar function, this protection is crucial in the rare but possible cases of high volatility where prices could become erratic.
This mechanism is worth verifying for every broker and is a must-have, especially with high leverage.
Trading costs
We have the trading costs in terms of spreads, commissions, swaps, and then for deposits and withdrawals. Luckily, brokers’ spreads have become increasingly competitive and standard, meaning clients are unlikely to see notable differences, except for exotic pairs.
Some brokers might apply a small commission on fixed spread or zero spread accounts which are worth knowing. Swaps for most currencies are fairly reasonable with most brokers, but some significant variances can exist for exotic pairs.
Only swing and other long-term traders holding positions overnight should worry about this cost. For depositing and withdrawing, traders may prefer a broker not charging any commission on most electronic methods like cards and e-wallet options. Bank wire transfers are generally pricey and can take a few days to clear.
Customer service options
The modern forex broker should have a 24/5 responsive and interactive live chat to ensure queries are answered quickly. Often, this option reduces the need for telephonic service because of its accessibility and speed. However, phone support during business hours is still useful, along with email and instant messaging communication channels.
Conclusion
Forex continues to form part of many investors’ portfolios because of it’s round-the-clock trading and access to high leverage. It can also be a good way for those with minimal capital to get started navigating their way around the financial markets before branching into other derivatives.
Regardless of the margin offered, whether high or low, leverage is only a tool. Its potential to magnify gains or losses ultimately lies with how a trader uses it responsibly. The risk of ruin is ever-present with any investment, further emphasizing the importance of traders being knowledgeable and conscious of how they conduct themselves in the markets.
Risks of High-Leverage Trading
1. Amplified losses
When using “regulated forex brokers with high leverage,” even small market movements against your position can amplify your losses, which have the potential to wipe out your entire account balance.
2. Interest charges on borrowed funds
As you know, when you trade using “high-leverage stock brokers”, you borrow funds from your broker. These borrowed funds often come with interest charges, which can accumulate over time, especially in long-term positions.
3. Overleveraging
While “brokers that offer high leverage trading” is attractive to many traders, it may lead some to take on excessively large positions relative to their account size and risk tolerance.
4. Lack of Regulation:Some “market execution brokers with high leverage” may operate in less regulated jurisdictions. This can increase the risk of encountering unscrupulous brokers or potential fraud, where traders might not have proper recourse in case of disputes.
Things to Bear in Mind before Trading with Leverage
1. “Top forex brokers with high Leverage” trading can amplify potential profits. Still, it can also lead to substantial losses, potentially wiping out your entire account balance if the market moves against your position.
2. Read your margin agreement and make sure you know how your margin account works and what ensues if the price of the securities you buy on margin drops (or rises in the case of short-selling)
3. Seek the advice of “high leverage regulated brokers” who understands your investment objectives, financial resources, and risk tolerance.4. Consider the costs and fees associated with trading. “High leverage forex brokers regulated” may have different fee structures, including spreads, commissions, and overnight financing charges.
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