This is an explanatory article on leverage at GEMFOREX.
GEMFOREX offers a high leverage of up to 1000x.
But actually there are some conditions to trade with 1000x at GEMFOREX.
In this article, I will explain what leverage is for beginners, the maximum leverage and leverage limits of GEMFOREX, and how to manage risk with less risk.
- What is the leverage?
- What is the maximum leverage of GMFOREX?
- Leverage limits of GEMFOREX
- How to manage risks with 1000x high leverage
What is Leverage?
Leverage means the principle of leverage.
Using the principle of leverage, you can lift a large stone with a small power.
In the forex world, it refers to a system that allows you to make large trades with a small amount of margin (money).
Leverage is often expressed as “100 times”, “100x” or “1:100”.
In the case of 100 times leverage, it is possible to trade 100 times the amount of margin.
If your margin is $100, you can trade $10,000.
A $100,000 margin allows you to trade $10,000, and a $100,000 margin allows you to trade $10,000,000.
Differences in Required Margin due to differences in leverage
The Required Margin can be calculated using the following formula
Required Margin = Number of lots × Market price ÷ Leverage
Let’s calculate exactly how much the required margin changes with different leverage.
For example, let’s assume the following trade
Currency pair: EURUSD
Number of trades: 1 lot (=100,000 currency)
Market price: 1 EURO = 1.200 USD
100,000 EUR × 1.200 ÷ 1 ＝ 120,000 USD
100,000 EUR × 1.200 ÷ 100 ＝ 1,200 USD
100,000 EUR × 1.200 ÷ 500 ＝ 240 USD
100,000 EUR × 1.200 ÷ 1000＝ 120 USD
Thus, if you take advantage of GEMFOREX maximum 1000x leverage, you can trade 100,000 Euros for only $120.
Trading leverage at GEMFOREX
The maximum leverage of GEMFOREX is 1000x, actually not all products can be traded at 1000x at any given time.
Same leverage in all account types
At GEMFOREX, there are two account types for real accounts.
All-in-One account and No spread account.
Both account types have the same maximum leverage.
Also demo account has same max leverage setting, 1:1000.
| Account Type | Max Leverage |
|---|---|
| All-in-One | 1:1000 |
| No Spread | 1:1000 |
| Demo | 1:1000 |
Restricted by account balance
The maximum leverage of GEMFOREX depends on your account balance.
As shown in the table below, you can trade with a maximum leverage of 1,000x up to an account balance of $20,000, but if your account balance exceeds $20,000, the maximum leverage is limited to 500x.
However, 500x is still a fairly high leverage, so I don’t think it is a big restriction.
| Account Balance | Max Leverage |
|---|---|
| ～ $20,000 | 1:1000 |
| $20,000～ | 1:500 |
Depends on the trading instrument
At GEMFOREX, you can trade not only currency pairs, but also CFDs such as stock indices, oils and gold.
The definition of maximum leverage varies from product.
As you can see in the table below, currency pairs and metals (e.g. gold) can be traded with a high leverage of 1000x at GEMFOREX.
For stock indices and energy CFDs, the leverage is reduced and also depends on the symbol.
| Products | Max Leverage |
|---|---|
| Currency Pair | 1:1000 |
| Stock Index | 1:66～1:200 |
| Energy | 1:66 |
| Metal | 1:1000 |
All of GEMFOREX products and the maximum leverage that can be traded with each of them are explained in detail in the separate article “GEMFOREX All Products and Trading Conditions | Forex and CFDs“. Please take a look.
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Recommended operation
Especially in the world of forex, people focus on the high leverage, but the higher leverage is not the better.
Leverage is a double-edged sword.
If you trade a product with high volatility with full leverage, a small price reversal will result in an immediate loss.
This is not a recommendation, but rather a principle of leveraged trading.
- Follow strictly the money management rules
- Understand the margin requirements and the amount per pips
- Adjust the number of lots and leverage
When you increase the leverage, the amount of fluctuation per pips becomes larger.
It is necessary to decide beforehand how much you can bear in case the price moves against your expectations. After properly planning your trading strategy, prepare sufficient funds and decide on the number of lots to order.
At this time, you can also change the leverage in advance to reduce the risk of loss cutting in case of unexpected price movements.
This means that rather than operating with 1000 times leverage, you can reduce the risk to one tenth by using 100 times leverage.
How to Change GEMFOREX Max Leverage Setting?
Actually, GEMFOERX does not allow you to change the leverage by yourself.
Many other forex brokers allow you to freely set the leverage for each account.
However, GEMFOREX does not allow you to change the leverage individually.
Even when you open an account, you do not have to specify the leverage.
If you have an all-in-one account or a no-spread account, the maximum leverage is automatically set to 1000x.
So how do you control the risk?
Basically, the following measures should be taken.
- Lower the number of lots you trade.
- Keep the balance in your account low.
If you order 0.01 lots instead of the usual 1 lot, it is equivalent to reducing your leverage by a factor of 100.
In addition to lowering the lot size, it is also effective to keep your account balance low.
GEMFOREX offers NBP (Negative Balance Protection system), which means that even if you suffer a loss and your account balance becomes negative, it will be automatically compensated.
By keeping your account balance low, you can reduce the amount of loss-cutting in case of emergency.
However, if your account balance is too low, you may face a stop out due to too low a balance, when you would have been able to withstand a return in price.
How much you should keep in your account depends on what products and strategies you are going to trade.
An effective way to trade with a small account balance is to use multiple accounts.
For more information on how to create an additional account at GEMFOREX and how to operate with less risk by utilizing multiple accounts, please refer to the separate article “How to Open GEMFOREX Additional Account | How to Reduce Risks“.
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Summary
I hope you enjoyed the article.
Not all products in GEMFOREX can be traded with 1000x leverage.
Also, you cannot change the leverage settings, so you need to be more careful in your trading strategy, such as the number of lots and stop loss settings.
On the contrary, you can take advantage of the characteristics of leverage to aim for larger profits while reducing risk.
Please make sure you have a good understanding of leverage and use additional accounts to operate safely.
＼Just 3 minutes!!／
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