High leverage: what 500:1 buys, and what comes off the table with it
The leverage figure belongs to the entity that opens your account, not to the brand. The arithmetic of what a high number does to a deposit, and the protections that disappear alongside it.
Search for a broker offering high leverage and you get lists ranked by the number: 500:1, 1000:1, unlimited. The number is real. What the lists leave out is that it is not a property of the brand at all. It belongs to the legal entity that opens your account, and that entity is chosen for you based on where you live and which page you signed up through.
Two people can hold accounts with the same brand, the same logo and the same platform, and sit under different companies with different caps and different protections. Working out which one you are dealing with matters more than the figure on the landing page.
What does high leverage change about a position?
Not how much you can lose in a bad move. It changes how little you need to deposit to be exposed to that move, and therefore how small an adverse move has to be before the deposit is gone.
Take a position sized so the whole deposit is committed as margin. The adverse move that consumes it is arithmetic:
| Leverage | Margin required | Adverse move that wipes the margin | EUR/USD equivalent |
|---|---|---|---|
| 30:1 | 3.33% | 3.33% | around 360 pips |
| 50:1 | 2% | 2% | around 215 pips |
| 100:1 | 1% | 1% | around 108 pips |
| 200:1 | 0.5% | 0.5% | around 54 pips |
| 500:1 | 0.2% | 0.2% | around 21 pips |
| 1000:1 | 0.1% | 0.1% | around 11 pips |
Twenty-one pips is inside the ordinary range of a quiet European morning. It is smaller than the gap that follows a scheduled data release. At 1000:1 the figure sits close to the spread plus commission on some pairs, which means the position starts within one ordinary tick of the level that closes it.
None of that makes the high number a trick. It makes it a position-sizing instrument rather than a returns multiplier, and the two get confused constantly. A trader who uses 500:1 to open the same position they would have opened at 30:1, while leaving the rest of the deposit uncommitted, has changed nothing about their risk. A trader who uses it to open a position twenty times larger has changed everything.
Why can one brand offer 30:1 and 500:1 at once?
Because a group can hold several licences and route clients to different companies. The caps come from the regulator of whichever entity holds the account, and they are not close together: 30:1 under ESMA, the FCA and ASIC, 50:1 under the NFA in the United States, 20:1 under MAS in Singapore. Our leverage limits by regulator page has the full scale by instrument.
An offshore entity sits outside all of it and can publish any number it likes. That is legal and ordinary. The part worth attention is that the licence displayed most prominently on a homepage is often not the licence that will apply to you.
What comes off the table with the higher number?
The cap is the visible half of the rules. The invisible half is a set of protections that travel with it, and they do not follow you to the entity offering 500:1.
Negative balance protection. Under ESMA, FCA and ASIC rules a retail client cannot lose more than the account balance; if a gap carries the position past zero, the firm absorbs it. Offshore entities frequently do not offer this. The difference shows up exactly once, after a weekend gap, and it is the difference between losing a deposit and owing money.
The 50% close-out. Regulated entities must begin closing positions when equity falls to half the required initial margin, calculated across the account rather than per position. Offshore, the trigger is set by the firm and is usually lower, so positions run further into loss before anything intervenes.
Compensation if the firm fails. An FCA-regulated entity brings FSCS cover for eligible claims up to £85,000. CySEC entities have the Investor Compensation Fund. Most offshore jurisdictions have no scheme at any level, so a failure is simply a loss.
A route for complaints. Regulated entities answer to an ombudsman or an equivalent. An offshore entity answers to a regulator that may have no complaints process and no practical enforcement against a firm serving clients on the other side of the world.
The ban on incentives. Deposit bonuses and trading credits are prohibited for retail clients in the EU, the UK and Australia. When a 100% deposit bonus appears next to a high leverage figure, the pair of them together tells you which entity is making the offer, before you read a word of the terms.
How do you find out which entity will hold the account?
Four places, in the order they are worth checking.
The client agreement. Not the homepage, not the “regulation” page. The agreement names the company you contract with, and it is usually a PDF linked from the account-opening flow rather than the marketing site.
The footer, read carefully. Groups often list every licence they hold, with a line underneath explaining which entity serves which residents. That line is the answer, and it is set in the smallest type on the page for a reason.
The register, using the entity name rather than the brand. A brand name frequently returns nothing because the licence sits with a differently named company. Searching for the brand and finding nothing proves very little; searching for the company named in the agreement proves a lot.
The deposit page. The bank details and the payment processor tell you which jurisdiction the money lands in, and they sometimes contradict the entity named earlier in the flow. Where those two disagree, the disagreement is the finding.
Is a high number ever the right choice?
Yes, in narrow circumstances, and the honest version of the case is worth stating rather than dismissing.
An experienced trader running small positions with hard stops may prefer to keep most of their capital outside the broker entirely, posting a small margin and accepting that the account is not where their money lives. Higher leverage makes that structure possible. So does trading a strategy where positions are opened and closed inside a session and overnight exposure never arises.
What that trader is buying is capital efficiency, not a larger position. The moment the higher cap is used to size up rather than to fund down, the arithmetic in the table above starts working against the account, and it works quickly.
The case falls apart entirely for anyone depositing money they cannot afford to lose, because the protections listed above are precisely the ones designed for that situation and precisely the ones that are absent.
What we check, and what we don’t
For every broker on this site we record which entity takes the client, which register that entity appears in, and whether negative balance protection applies to that entity rather than to the group. Where a firm will not say which company opens the account, that goes on the page as it stands, because the refusal is information.
We verify licences directly in the registers we hold in full, currently ASIC in Australia and CySEC in Cyprus. For firms regulated elsewhere we point you at the register and the exact entity name to search, which is a more reliable answer than a claim of our own.
We do not hold funded trading accounts, so nothing on this site reports spreads, execution speed or slippage from our own trading. Where those figures appear anywhere, they are the firm’s own published numbers, labelled as such and dated. Our methodology sets out the rest, and the advertising disclosure covers how the site is paid.
Sources
- ESMA — Product intervention measures on CFDs and binary options
- FCA — Statement on ESMA product intervention measures
- ASIC — Product intervention order: CFDs
- FSCS — Compensation limits