Markets & Assets
Leverage
Definition
The use of borrowed capital to increase the size of a trade position beyond what your account balance alone would allow.
How It Works
Leverage in prop trading lets you control larger positions with less capital. For example, 1:100 leverage means $1,000 controls $100,000 worth of currency.
Prop firm accounts often come with generous leverage — 1:30 to 1:100 for forex, though some offer up to 1:200. Higher leverage amplifies both profits AND losses.
In prop trading, you must balance leverage with drawdown rules — using maximum leverage makes it easy to hit drawdown limits from small price movements. Most successful prop traders use only a fraction of available leverage.
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