How does leverage affect required margin?

Leverage is often misunderstood as changing risk directly. It does not change what a pip is worth. It changes how large a position the account can open.

Worked comparison on a $10,000 account

• 1:100 leverage: maximum notional around $1,000,000 (about 9 lots of EUR/USD).
• 1:30 leverage: maximum notional around $300,000 (about 2.7 lots).
• 1:10 leverage: maximum notional around $100,000 (about 0.9 lots).

With 9 lots of EUR/USD, a 50-pip move against the trader is $4,500, nearly half the account. With 0.9 lots, the same move is $450.

How prop firms use leverage

• Account leverage: sets the margin requirement.
• Leverage caps by asset class: lower for volatile instruments such as crypto.
• Effective leverage rules: cap total open notional relative to equity, whatever the account's margin leverage.

Choosing a setting

High leverage attracts some traders but mostly enables faster breaches. Many firms choose moderate leverage and rely on loss limits for risk control.

PropExecutor sets leverage per account for margin, and offers two separate rules on top: maximum effective leverage (total open notional ÷ equity) and leverage by asset class, with defaults of 1:30 for forex, 1:20 for metals and indices, 1:10 for energy and 1:2 for crypto, each adjustable.