Leverage lets you control a position larger than the money in your account. Margin is the amount your account sets aside to hold that position open.
Example. EUR/USD is at 1.1000. One standard lot is 100,000 units, worth about $110,000. At 1:100 leverage, the margin needed is about $1,100.
It cuts both ways
A 1% move against that position is about $1,100, which is the entire margin. Leverage does not change how far the market moves. It changes how much each move matters to your account.
Things worth knowing
- Margin is not your risk. Your risk is the distance to your stop, multiplied by your size.
- Having high leverage available does not mean you should use it.
- If your equity falls too far, positions can be closed automatically. This is called a stop-out, and the level varies.
- On a challenge, the loss limits usually matter long before margin does, so size to the limits.
This is general information, not advice. It does not consider your situation, and trading carries a high risk of loss.