Best High Leverage Forex Brokers

How to decide which high leverage forex broker best suits you

Now that you know about some of the best high leverage forex brokers available to you, you’re probably wondering how to decide which of the trading platforms would best suit you and your trading style.

Well, this all comes down to your experience levels, appetite for risk, and your reasons for trading in the first place.

For example, if you’re still a beginner forex trader and you just want to try your hand at trading forex, you may want to consider using a broker with little to no minimum deposit requirements.

Multiple trading platforms would be suitable for you in this case, such as Pepperstone or IG.

With one of these accounts, you won’t need to commit a large sum of money before you start trading.

Meanwhile, if you have a lower tolerance for risk, you may also want to consider a broker with lower leverage.

Of course, many FCA-regulated brokers cap leverage at 30:1 for retail investors, but you may still want to stay away from offshore brokers, or any that aren’t regulated in the UK and have higher leverage, such as VantageFX.

What is forex trading?

The foreign exchange market, or “forex” as it’s more commonly known, is the global marketplace that deals with the exchanging of currencies.

When you trade on the forex, you will see that currencies are usually listed together. These are called “currency pairs”, and you typically get major currency pairs, which are the most heavily traded currencies on the forex market, and minor pairs, which are less commonly traded currencies.

For example, GBP/USD or USD/EUR are considered forex major pairs, while GBP/CAD or GBP/JPY are considered minor pairs.

Forex markets aren’t like traditional financial markets in that there isn’t a central marketplace. All forex trades are made “over the counter” (OTC) and take place electronically on computers.

As such, the forex market is open at all hours of the day, seven days a week.

How does forex trading work?

There are two main ways for investors to trade on the forex market: the spot market, and forward and future markets.

The spot market is the most common way currency traders access forex. This is where currencies are bought and sold, and when you trade on the spot market, you are essentially speculating on price movements of currencies.

The price of currencies on the spot market is dictated by a plethora of different factors, including:

• National economic performance
• Supply and demand
• Geopolitical situations
• The perception of the future performance of one currency against another.

The difference between the value of the two currencies is called the “spread”, and you may find that many forex brokers will build their trading fees into these spreads.

If you were to purchase a currency pair, and the spread between the pair increased, you could close your position and make a profit depending on how much you purchased.

Of course, if the value of the pair decreases and the spread shrinks, you could end up losing money.

Investors can also trade forex through forward and future markets. This is essentially derivative trading – you aren’t actually purchasing the underlying asset, instead placing “bets” on the movement of a currency pair.

This allows trading CFDs or making spread bets on forex futures, which is where the name of the market comes from. Though, you should keep in mind that CFDs are complex instruments, so you should do adequate research before you trade them.

Indeed, brokers are required to state how many retail investor accounts lose money when trading CFDs on their platform, a figure that is typically between 50% and 80%.

Consider taking independent investment advice if you’re unsure whether trading CFDs is suitable for you.

How is forex trading taxed in the UK?

When you trade forex in the UK, you will typically be liable to pay Capital Gains Tax (CGT) on any profits you make that fall above your CGT exempt amount. As of the 2022/23 tax year, this exemption stands at £12,300.

When you speculate on forex markets, you won’t be taxed on individual trades, but rather all at once at the end of the tax year.

It’s worth keeping in mind that HMRC considers spread betting to be gambling rather than investing, so you won’t face CGT when doing so.

What is leverage?

Leverage allows you to essentially “borrow” money from your broker to make a large trade.

These leverages are usually presented to you as a ratio – for instance, 30:1, 50:1, 200:1 – though you may see leverage presented as a percentage, commonly referred to as a margin rate.

Your broker will offer you this leverage, and you are required to make an initial payment depending on how large your trade is.

For example, say you wanted to invest £20,000 in the GBP/USD currency pair. If your broker offered you leverage of 30:1, you would be required to pay just £666 to meet the margin.

The risks of leverage

Whilst leverage can mean you’re exposed to higher potential profits, this also works conversely.

If your forex trade doesn’t go your way, your losses will also be magnified, and you could end up losing money rapidly. This is because the larger your leverage is on a position, the more of an impact small changes in prices can have on your trade.

Of course, when using an FCA-regulated broker, you will typically be given negative balance protection, which stops you from losing more money than you have in your account – you can read more about FCA restrictions in the next section.

Regardless, you can still end up taking a big hit.

FCA restrictions

While you may be keen to start trading with high leverage, it’s important to keep in mind that leverage in the UK is typically restricted to 30:1 for CFDs and CFD-like products.

This is due to the Financial Conduct Authority’s (FCA) restrictions, which made temporary rules from the European Securities and Market Authority (ESMA) permanent.

Since leverage can make trades riskier, especially for those that are still beginners, the FCA protects less experienced investors with restrictions to help prevent them from losing money on these complex financial instruments. Their restrictions require brokers to:

• Limit leverage to between 30:1 and 2:1
• Close a customer’s position when their funds fall to 50% of the margin needed to maintain their open positions
• Provide protections that guarantee a client can’t lose more than the total funds in their account (negative balance protection)
• Stop offering monetary and non-monetary enticements to encourage trading
• Provide a standardised risk warning to tell customers the percentage of their retail client accounts that lose money when trading these products with them.

These rules help to protect retail investors from losing large sums of money due to leverage.

Most forex brokers in the UK will have FCA authorisation, but that doesn’t mean all will. So, check that your broker is regulated before you start using a trading platform.

Retail investors vs professional investors

While you typically can’t obtain leverage higher than 30:1 on retail investor accounts, you can get higher leverage on professional accounts.

To get a professional trading account, you first need to prove that you’re experienced.

The rules and requirements to set up a professional account vary from broker to broker. Still, you’ll generally be required to show several years of experience trading high leverage instruments and have a certain amount of investment capital available.

On a professional trading account, you can access high leverage, sometimes as high as 5000:1, but you should note that professional trading tends to be less regulated than retail investing.

What is considered good leverage for forex trading?

There is technically no such thing as “good leverage”, as it all comes down to your experience levels and tolerance for risk.

If you’re still new to forex trading, you may want to think about using lower leverages. As you’ve seen, if trades don’t go your way and you have high leverage, you could end up losing lots, if not all, of your trading capital.

So, if you’re still unsure about forex trading, lower leverage could potentially prevent you from losing much of your money.

The pros and cons of high leverage forex trading

Most investing strategies have pros as well as cons, and high leverage forex trading is no different. Continue reading to find out what these are.

The benefits of high leverage forex trading

• High leverage can help you make larger trades

Leverage is essentially a loan from your broker to make a trade. You are only required to make a smaller initial payment, which is called the “margin”.

This allows you to make large trades with less initial capital. In fact, you could even get access to high-value securities with high leverage since you aren’t required to supply the total capital amount.

• The potential for higher returns

Another benefit of not having to put up as much initial capital is that you can potentially earn higher returns if the trade goes your way.

Depending on the size of your trade and the margin requirements, your potential profits could be magnified thanks to high leverage.

• Leverage is typically interest-free

Despite leverage essentially being a loan, there is no interest on any money you borrow from your broker.

This means that you can technically borrow money for “free”.

The downsides of high leverage forex trading

• Your losses can be magnified with leverage

Leverage is truly a double-edged sword – much like your potential gains are magnified with leverage, as are any losses.

With leverage, you could overextend your trades, or take high leveraged trades thinking your trading strategy is bulletproof.

If this trade doesn’t go your way, though, you could end up losing money rapidly.

• You could end up losing more money than you initially paid in

Similarly, leverage could also result in you losing far more money than you originally paid in.

When you open a leveraged position, you are only typically required to pay the margin, which is a percentage of the total trade.

If this trade doesn’t go your way, though, you are required to pay the full amount back.

Thankfully, most UK-regulated brokers have negative balance protection, which stops you from getting into debt with your broker.

But you could still lose most, if not all, of the capital you have deposited into your account if you’re not careful.

• High leverage forex trading tends to be complex

One of the biggest downsides of high leverage trading is the complexity of leverage itself.

It can be quite difficult at times to keep track of how much you could potentially earn, or lose, when you use leverage.

This is especially the case for beginners – if you don’t fully understand how leverage works, you could end up out of pocket if a trade doesn’t go your way.

Best High Leverage Forex Brokers FAQs

Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

CFDs are complex instruments and more than half of retail investor accounts lose money when trading CFDs. Please make sure that you know these risks before you start trading and that you’re aware there’s a high chance of losing money rapidly on your investment.

Related Forex guides