Leverage lets you control a larger position than the cash you put up; margin is the deposit the broker requires to open and hold that position. At the EU/UK retail cap of 30:1 on major currency pairs, a deposit of 100 units of currency controls a position worth 3,000. Leverage magnifies both gains and losses equally — the same mechanism that can multiply a profit can wipe out your margin on a small adverse move.
What is leverage?
Leverage is the ratio between the size of a position you control and the amount of your own money committed to it. Expressed as something like 30:1, it means you can open a position worth 30 times the margin you put up. CFDs are leveraged products by design: you do not buy the underlying asset, you take a position on its price movement, and the broker requires only a fraction of the full value as margin. This is what makes small accounts able to take large positions — and what makes losses build so quickly.
The crucial point, often lost in marketing, is that leverage is symmetrical. It magnifies losses exactly as much as it magnifies gains. At 30:1, a market move of just over 3% against your position can wipe out the entire margin you committed. Higher leverage does not improve your odds; it shortens the distance between you and a margin call. This is precisely why regulators capped retail leverage in the first place.
What is margin, and what is a margin call?
Margin is the money the broker sets aside from your account to open and maintain a leveraged position. There is usually an initial margin to open the position and a maintenance margin you must keep to hold it. If the market moves against you and your account equity falls towards the maintenance level, the broker issues a margin call — a requirement to add funds or reduce your position. If you cannot or do not, the broker can close positions automatically to protect itself.
Under the EU/UK rules, brokers must close out a retail client's positions when account equity falls to 50% of the required margin (the margin-close-out rule), which limits how far a losing position can run before it is cut. Combined with negative-balance protection, this means a retail client cannot lose more than the funds in the account. These rules reduce the worst outcomes, but they do not stop you losing your whole balance on a leveraged bet that goes wrong.
The EU/UK 30:1 retail cap
Under ESMA rules — retained in equivalent form by the FCA in the UK after Brexit — retail leverage on major currency pairs is capped at 30:1, with lower caps on more volatile instruments: typically 20:1 on non-major pairs, gold and major indices, 10:1 on commodities other than gold and on minor indices, 5:1 on individual shares, and 2:1 on crypto-related products. These caps exist because higher leverage was directly linked to outsized retail losses before the rules came in.
Higher leverage is only available to clients who qualify and opt in as 'professional', which requires meeting strict criteria and which strips away most retail protections — including the leverage cap, negative-balance protection in some cases, and the margin-close-out rule. Poland is a partial exception, allowing up to 100:1 for clients who qualify as 'experienced'. Treat any route to more leverage as a serious increase in risk, never a default upgrade.
Frequently asked questions
What does 30:1 leverage mean?
30:1 leverage means you can control a position worth 30 times the margin you commit — so 100 units of currency can control a position worth 3,000. It is the EU/UK retail cap on major currency pairs. Leverage magnifies losses as much as gains.
What is a margin call?
A margin call is the broker's requirement to add funds or reduce a position when your account equity falls towards the maintenance margin. Under EU/UK rules, a broker must close out a retail client's positions when equity falls to 50% of required margin, which limits how far a losing position can run.
Can I get higher leverage than 30:1 in the EU?
Only by opting in as a professional client, which requires meeting strict criteria and removes most retail protections. Poland additionally allows up to 100:1 for clients who qualify as 'experienced'. Higher leverage is a serious increase in risk, not a default upgrade.
Sources & further reading
Spreadwise is an independent publisher comparing ESMA-regulated forex and CFD brokers across Europe and the UK. Our editorial desk verifies every regulatory claim against the regulator's own register and never accepts payment for a better review.