Plus500 Leverage

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The leverage you get with an option CFD trading account is a measure of how much you can risk for any potential profits. It’s a measure of how much risk capital you have access to, and not necessarily the amount you’ll be investing. In general, there are two types of accounts: standard and non-standard.

The latter has higher risk but also provides greater rewards. With non-standard accounts, brokers don’t place restrictions on your investment, meaning you can use as little or as much money as you want when buying options contracts.This article explains how leverage works with an example of Plus500 broker and their different levels of leverage in various jurisdictions.

Plus500 EU Leverage

The European Securities and Markets Authority (ESMA) have restricted CFDs for retail investors. There is a 30:1 leverage limit for major FX pairs, a 20:1 limit for non-major pairs, gold, and major indices, a 10:1 limit for other commodities and non-major indexes, a 5:1 limit for stocks, and a 2:1 limit for cryptocurrencies.


Plus500 Singapore Leverage

A local regulation has been drafted to meet the demands of Singapore's CFD market, which is one of the largest in the world.

There is a limit on the amount of leverage available to retail traders as of 2019. MAS restricts retail traders to a leverage ratio of 20:1 as opposed to 50:1 for accredited investors.

Plus500 Leverage International

According to regulatory guidelines, Plus500 offers a maximum leverage of 1:30 in Australia and the UK. Depending on the asset, leverage varies.

How to Get High Leverage on Plus500

In order to get high leverage on Plus500, you must have a Professional Account. As you Pro, you can get access to a maximum leverage of 1:300. You can upgrade to Plus500 Pro if you have net assets of at least AU$2.5M or if your gross income for each of the last two financial years was at least AU$250,000

Plus500 Leverage Levels by Instrument

Instrument Leverage
Forex 1:30
indices 1:20
ETF 1:5
Shares 1:5
Commodity 1:20
Crypto 1:2
Best high leverage (up to 1:2000) Forex brokers

How Does Leverage Work?

When you buy an option, you are either hoping the price of the underlying security goes up or expecting it to go down. You have to close the trade before expiration, at which point you either sell the option or allow it to expire worthless if it’s out of the money.

You can lose a maximum of the amount you invest in the trade (the premium), regardless of the price movement of the underlying security. The potential for profit is determined by the amount you invest relative to the premium. For example, if you invest $10 and the underlying security goes up $5, you have a 50% return on investment. If it goes up $20, you have a 200% return on investment.

Another example is if you invest $800 in an option with an underlying security that goes up $800. That means you’ve doubled your money. However, using too much leverage can also result in you losing more than that. If the underlying security goes down $800, you’ve lost more than your initial investment. In extreme cases, this can even lead to your account being liquidated, which means your broker closes it to prevent a massive loss on their end.

Leverage increases your potential profit but also your risk. Using leverage effectively requires you to know how to manage your risk to stay in the black. If you use too much leverage, you can lose more than your initial investment, which is why leverage trading can be so risky. In general, the more leverage you use, the higher your potential profit, but also the higher your potential loss. Professional traders use high amounts of leverage to maximize profits, but you must be very careful when doing so.

FAQs

What is the process of trading options CFDs?

In an option trade, the trader is making an investment in the future performance of a trading instrument such as a stock, index, or commodity.

What are the main benefits of trading options CFDs?

The greater percentage change in options can lead to higher volatility, resulting in higher returns. The lower price of options compared to their underlying instruments allows larger positions to be opened with lower margins.

Why do some brokers offer higher leverage on certain assets?

It depends on the asset and the associated risks. The higher the risk, the lower the amount of leverage a broker will offer. For example, some brokers may offer higher leverage in the commodities market, which is inherently riskier. They may also offer higher leverage on American-style options, as they are more likely to be out of the money when the trade closes.

Does Plus500 offer leverage?

Yes. Plus500 offers 1:30 leverage for Forex CFDs, while it offers 1:5 leverage for shares CFDs.

Team that worked on the article

Andrey Mastykin
Author, Financial Expert at Traders Union

Knows about
Trading strategies, technical analysis, Forex, stock market, long-term investing

Andrey Mastykin is an experienced author, editor, and content strategist who has been with Traders Union since 2020. As an editor, he is meticulous about fact-checking and ensuring the accuracy of all information published on the Traders Union platform. Andrey focuses on educating readers about the potential rewards and risks involved in trading financial markets.

He firmly believes that passive investing is a more suitable strategy for most individuals. Andrey's conservative approach and focus on risk management resonate with many readers, making him a trusted source of financial information.

Experience
Andrey's passion for finance began in 2009, and he has since accumulated extensive experience in trading and investing across various asset classes, including stocks, Forex, and cryptocurrencies.

He has spent over 15 years managing his own capital and working with financial portals, financial institutions, and IT companies, as a financial writer and analyst, further refining his investment expertise.

He is the author of several training courses on investing and trading in financial markets. Led multiple FX/Stocks/Crypto webinar educational presentations. Authored hundreds of articles on the global economy, stock, cryptocurrency, and Forex markets, along with trading strategies. He has also penned hundreds of professional reviews of financial firms.

Throughout his journey, Andrey has been heavily influenced by the works of renowned authors and investors like Benjamin Graham, Ray Dalio, Robert Shiller, and Nassim Taleb.

Dr. BJ Johnson
Dr. BJ Johnson
Developmental English Editor

Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.

The topics he covers include trading signals, cryptocurrencies, Forex brokers, stock brokers, expert advisors, binary options. He has also worked on the ratings of brokers and many other materials.

Dr. BJ Johnson’s motto: It always seems impossible until it’s done. You can do it.