Best Leverage for Beginners with Small Accounts

For a beginner trader the temptation to use greater leverage to amplify gains may be strong. However, leveraging is a powerful yet dangerous instrument. How do you choose the best leverage for a small account? Let’s find out!

Leverage: benefits and risks

Leverage allows you to control larger trade sizes with a small deposit (margin). But it’s not free capital: essentially you are borrowing money from a broker to enter bigger positions. If you have only $10 in your account, with 1:50 leverage, $10 allows you to control $500. It is crucial to note that while leverage multiplies the profits, it equally multiplies the losses.

Margin is the amount of money your broker locks from your account to open a leveraged position. Think of it as a security deposit — it lets you borrow money from your broker to control a larger trade.

For example, suppose you want to trade 0.01 lots (1000 units) of EURUSD. If your broker’s leverage is 1:50, the required margin is $20 (1000 ÷ 50). So you need $20 in your account to open that trade.

Risks of using leverage:

Amplified losses.
Margin calls: if the market moves against you, your broker may liquidate your position.
Account wipeout: one bad trade using high leverage can drain your entire balance.
Overtrading: sometimes easy access to leverage may lead to impulsive trades.

How to choose the right leverage ratio

Consider the key factors

Your experience: it’s always better to start small. Err on the side of caution and the possible mistakes won’t cost you too much. Increase leverage only after gaining consistent profits.

The account size: sometimes the temptation to use high leverage starting with a small sum is great. Don’t give in, remember that high leverage like 1:500 or 1:1000 can wipe out a small account very quickly.

Your risk tolerance: lower leverage means lower risk per trade. Check out how risk tolerance corresponds to account size:

Account size	Low risk	Medium risk	High risk
$5	1:15	1:25	1:45
$10	1:15	1:20	1:40
$30	1:10	1:15	1:35
$50	1:10	1:12	1:30

For beginners with small accounts ($10–$50), the best leverage is generally about 1:10. It’s an optimal balance between risk and opportunity.

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Calculate your position size

To match leverage with risk, use a position size calculator. For example, say you have $10 in your account and use 1:20 leverage. Your buying power is $200, but you don’t have to use all of it. In fact, it’s better to risk only 1-2% of your capital per trade. You could trade 0.08 lots (micro lot) with a stop-loss of 50 pips.

Use risk management tools

Risk management can save you a lot of trouble and losses in the future, so don’t neglect it!

Always use stop-loss orders to minimize losses and ake-profit orders to lock in gains.
Don’t risk more than 1–2% of your capital per trade.
Stick to micro lots (0.01) if your account is under $100.

Use a demo account to practice

Before trading with real money, try your strategy by using a demo account.

Open a demo account with your broker. For example, you can try out new strategies with the FBS Demo Account in the FBS Personal Area.
Set the same leverage you plan to use (e.g. 1:10).
Practice using stop-loss and managing lot size.
rack your performance for at least 1–2 months to make a thorough analysis.

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Monitor margin level

Margin level is equity (your balance + floating profit/loss) divided by used margin (total margin locked for open positions). Multiply the result by 100 and you’ll get margin level expressed as a percentage.

Safe margin level is above 300%. If you see that, you're using margin conservatively. From 100 to 300% it gets risky.: Manage your trades. The danger zone starts below 100%: the broker may close your trades (i.e. risk of margin call).

Review and adjust trades

Keep a trading journal and analyze your trades regularly. Adjust leverage or position size if you’re too close to wiping out your account. Your goal should be consistent, small gains, not jackpots!

Ready to trade? Use beginner-friendly leverage with FBS and keep your capital safe.

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