This is an explanatory article about leverage at XM.
XM offers high leverage trading of up to 888x, but actually not all products can be traded at 888x.
In addition, certain conditions automatically limit the maximum leverage.
In this article, I will start with an explanation for beginners what leverage is, explain XM’s maximum leverage, leverage limits, and how to change the leverage.
- What is Leverage
- XM Maximum Leverage
- XM Leverage Limits and How to Recover it
- How to change your leverage
What is “Leverage”?
Leverage means “principle of leverage” in English.
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” 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.
When the margin is $10,000, you can trade $1,000,000.
This is the leverage trading.
Differences in margin requirements between different leverage levels
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 margin will change with different leverage.
For example, let’s say you want to trade 1 lot (100,000 currencies) of Euro vs Dollar (EURUSD).
If the market price is 1 Euro = 1.200 US dollar, the margin requirement is calculated by the following formula
Leverage 1:1
€100,000 × $1.200 ÷ 1 = $120,000
Leverage 1:100
€100,000 × $1.200 ÷ 100 = $1,200
Leverage 1:888
€100,000 × $1.200 ÷ 100 = $135
As you can see, with XM’s maximum leverage of 888x, you can trade 100,000 EUR for only $135.
Also, XM gives you a $30 account opening bonus when you open an account.
You may think it’s only $30, but if you take advantage of the leverage of 888x, you can trade $30 x 888 = $26,640.
For beginners, it may be a little difficult to understand the calculation of margin requirements.
XM provides a convenient tool on its official website that allows you to calculate margin requirements in one shot. Please take advantage of it.
About XM Trading Leverage
XM’s maximum leverage is 888x, but actually not all products can be traded at 888x at any given time.
Depends on account balance
XM’s maximum leverage will automatically change based on your account balance.
The total balance of all your accounts will limit you to the following leverage.
Please note that it is the total balance of all accounts, not the balance of one account.
XM allows you to create up to 10 additional accounts, but the total amount of those accounts will limit your leverage.
If you hit the limit, the leverage of all accounts you own will be automatically limited.
| Total Balace | Max Leverage |
|---|---|
| ～$20,000 | 1:888 |
| $20,001～$40,000 | 1:500 |
| $40,001～$100,000 | 1:200 |
| $100,000～ | 1:100 |
Depends on Product
Only currency pairs and gold can actually be traded on XM with a maximum leverage of 888x.
For other products, the maximum leverage is determined by each symbol.
| Product | Max Leverage |
|---|---|
| Currency Pair | 1:888 |
| Stock Index | 1:66～1:200 |
| Energy | 1:33～1:66 |
| Metal | 1:22～1:888(*Gold) |
| commodity | 1:50 |
All of XM’s products and the maximum leverage that can be traded with each of them are explained in detail in a separate article, “XM All Products and Trading Conditions | Forex and CFDs“. Please take a look.
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 888 times leverage, you can reduce the risk to one ninth by using 100 times leverage.
Hot to Change Leverage Setting in XM
XM’s leverage can be changed for each account.
Since you can change the leverage for each account, you can create additional accounts, change the trading instruments for each account, and reduce the leverage for the account with high volatility to reduce the risk.
You can change the leverage of XM by following the steps below.
Log in to Member Page
Login to Member page from XM Top Page.
Select the target account
From the Overview of My Account (Account List), select “Change Leverage” for the account you wish to change the leverage of.
Alternatively, from the account details, click on the edit symbol next to Leverage.
Change Leverage Setting
Select the leverage you want to change, in the range of 1:1 to 1:888.
Leverage is changed
The change in leverage will be reflected immediately.
For more information on how to create additional accounts at XM and how to manage risk by utilizing multiple accounts, please refer to the separate article “How to Open XM Additional Account | How to Reduce Risks“.
＼Just 1 minutes!!／
How to Recover Leverage Limits on XM
If the total amount of your account balance reaches the limit and the leverage limit is applied, you can recover the leverage by following the steps below.
- Withdraw funds so that the total account balance is less than the limit.
- Contact support when the withdrawal is complete.
You can probably change the leverage from the member’s page after step one, but I think it is more reliable to contact support to undo it just in case.
Summary
How was that?
At XM, not all products can be traded with 888x leverage.
It is also possible to take advantage of the characteristics of leverage to make larger profits or trade with less risk.
Please make sure you understand leverage and use the leverage changing function to manage your trading safely.
＼Just 3 minutes!!／
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