Leverage and Margin
Leverage doesn’t raise your risk — position size does. But margin can force exits.
Written and reviewed by the Fundezy team · how we produce this
Leverage is the most misunderstood number in retail trading. Your Fundezy account has a 1:30 leverage ceiling — the same ceiling many retail regulators impose on FX majors — but margin is tiered per instrument class, like a real retail account: 1:30 majors, 1:20 crosses and metals, 1:10 indices/energy/stocks, 1:2 crypto. Here's what that actually does and doesn't mean.
What leverage is
Leverage lets you control a position larger than your cash. At 1:30, about 3,333 of margin controls 100,000 of exposure — exactly one standard lot of a USD-base pair like USD/JPY. It is a capacity number, not a risk setting.
Margin mechanics
Required margin = position notional ÷ the instrument's leverage tier
The notional is the position's size in USD: lots × 100,000 exactly for USD-base pairs (USD/JPY, USD/CHF, USD/CAD), and lots × 100,000 × the entry price for pairs like EUR/USD. Each position's margin is frozen at the moment it opens. Crypto adds a weekend gate: from Friday 22:00 UTC to Sunday 22:00 UTC its margin doubles — the way real desks raise requirements ahead of thin weekend liquidity.
Pending orders reserve margin too. A limit or stop order that hasn't triggered yet still holds its own margin from the moment you place it — computed the same way, at the order's price, not the market's. The platform calls this initial margin, and it comes out of your free margin exactly like a position's. The reservation is released the instant the order triggers or you cancel it. So a resting limit order is a claim on your capacity, not a free option: stack up enough of them and you can run out of room to open anything else.
Examples on your account:
- 1.00 lot USD/JPY → notional 100,000 → margin 3,333
- 1.00 lot EUR/USD at 1.0900 → notional 109,000 → margin 3,633
- ~27.5 lots EUR/USD → margin ≈ 100,000 — your entire balance. That is the practical ceiling: leverage grants capacity, never equity you don't have
Equity = balance + floating P/L. Margin is held against your equity, and the platform continuously watches one ratio — margin level = equity ÷ used margin × 100, where used margin is everything open positions hold plus everything untriggered pending orders reserve:
- Below 100% → margin call: a journal entry warns the buffer is thin (once per episode)
- Below 50% → stop-out: the engine force-closes your worst-losing position, re-checks, and keeps closing until the level recovers — your stops' opinion is not asked
The key insight
Risk comes from lots × stop distance, not from the leverage ratio. Compare on a 100,000 account:
- 2.00 lots with a 50-pip stop → planned risk 1,000 (1%). Leverage used: about 2:1 (margin ≈ 7,300).
- 20.00 lots with a 50-pip stop → planned risk 10,000 (10%). Leverage used: about 22:1 (margin ≈ 72,700).
Same leverage availability; wildly different risk. Traders who "fear leverage" while oversizing positions have the relationship exactly backwards. Sizing (Lesson 1) controls risk; leverage merely sets how much rope is available — and at 1:30 the rope runs out faster than most beginners expect.
Where leverage does bite
- Margin calls and stop-outs — oversized positions leave no equity buffer; a normal adverse excursion drags margin level below 100%, then 50%, and the stop-out cascade liquidates you at the worst moment.
- Survivorship temptation — capacity invites over-trading size. The 1% rule makes max lots a computed output, never an ambition.
Practice on the platform
Place a trade and watch Balance, Equity, Used margin and Margin level in the account bar. Used margin is what positions and untriggered pending orders hold — hover the tile and it breaks out the pending share. Free margin is simply equity minus used margin: the room you have left. The gap between balance and equity is your floating P/L, updating tick by tick — internalize that equity, not balance, is what the margin-level math protects. Then place a pending order some way off the market and watch Used margin rise and Free margin fall while nothing has actually been opened yet.
By the numbers
The tiers mirror ESMA's 2018 retail caps — 1:30 major FX, 1:20 crosses and metals, 1:10 indices and energy, 1:2 crypto — so the margin habits here transfer directly to capped real accounts. The numbers in action: one standard lot of a USD-base major (100,000 notional) requires about 3,333 in margin at 1:30; crypto reserves 15× the margin per dollar of exposure (1:2 vs 1:30); a margin level below 50% triggers the stop-out engine, which force-closes the worst loser first.
Practice in the simulator
Watch equity vs. balance move on an open trade — apply what you just read with simulated money.
Check your understanding
4 questions · answer all, then submit.