Exposure and margin
Leverage allows a position with a notional value greater than its initial margin. Margin is collateral, not a measure of the maximum possible loss.
A balanced numerical example
At hypothetical 10:1 leverage, a $1,000 position requires $100 initial margin. A 1% move in the underlying produces a $10 gross gain or loss: 10% of that initial margin, before costs. This is an educational example, not a QB Capitals leverage offer.
What happens when losses grow
Falling account equity can reduce available margin. An account may reach a margin-call or stop-out threshold, depending on its terms. A larger permitted leverage ratio does not require a trader to use it.
Practice with exposure in mind
In a demo, compare positions of different sizes. Record both notional exposure and potential loss for a hypothetical adverse move. Check how financing and spreads affect the comparison.
Frequently asked
Does lower margin mean lower risk?
No. The market exposure determines how much a price movement changes the position value.
Further reading
CFTC: Foreign currency trading risks ↗External educational references do not imply endorsement, affiliation or regulation of QB Capitals.
Leveraged forex and CFDs involve significant risk of loss. Demo results do not predict live performance. Understand the risks ↗