Jan 12 2021 0
Leverage is the investment strategy that consists in using borrowed money in the XM broker. To be more specific, it consists in the use of a few financial instruments and borrowed capital just to be able to increase the potential return of any investment. Another good definition is: “it refers to the amount of debt that is used to finance assets”. When you learn to use leverage in XM, it means that you can work with more capital that the amount you have in your trading account.
What is XM leverage?
XM's highest leverage rate is 1:888. Let's compare it to other equally good brokers:
Even if you are just using a really small investment for the beginning of your work, you still can get some profits, but in the other hand, all your losses can also become drastic if you can’t apply proper risk management. But, XM is going to provide you a leverage range that offers you the liberty to choose your preferred risk level.
Details of XM accounts leverage
XM Micro account
- This is the first level of trading account in XM. This one is ideal for the beginners in this world.
- The micro account will offer you 1:500 leverage, XM spreads from 1 pip, and no commissions. It allows 150 maximum simultaneous orders open at any given time.
- You don’t risk your money in this account; you can just use it to test your skills and abilities and to absorb knowledge.
Learn more Micro Account here
XM Standard account
- It represents the next level, this one is used by seasoned traders. The maximum leverage is 1:400 and the spreads are fixed.
- XM Standard account is going to aloud you maximum simultaneous orders which are 300.
- This one requires at least $5 of investment, and, as it was said before, it comes with some profits and excellent facilities.
Learn more Standard Account here
XM Zero account
- It requires a minimum deposit of $100,000 to become activated. This is the most expensive account. This one is for traders with more significant sums of money.
- The maximum leverage is 1:300. The spreads are going to vary from 0.2 pips, and the maximum simultaneous open orders are 400.
Learn more Zero Account here
Whether you are looking to open an account, through the Micro, Standard or Zero account, you will be able to trade at the level you want. It doesn’t matter what your trading strategy or appetite for risk is, here you will find an account to match any of your needs.
How to change your XM leverage?
When you first open an account at XM, you are asked to choose your leverage for the account. Later on, you might want to change your trading strategies (which is totally normal in forex trading). This leads to the fact that you have to change the initial leverage as well. So how can you change your account's leverage at XM. Well, follow the steps below:
- Log into your Member Area on XM.com
- Look on the side of the screen, you'll see a button saying Change Leverage
- Click on it, and XM will show you a list of all leverage rates that can be applied to your account.
- Choose a leverage that you want and click Request
And it is done. Now your account has a new leverage rate.
XM leverage and XM regulations
XM is regulated by the FCA and CySEC. These two agencies play a very important role in deciding how high leverage can be offered to traders.
The main responsibility of the FCA is to ensure that financial services and financial markets work in a way that benefits consumers and member companies. In addition, FCA also encourages healthy competition in the market. Leverage is a pretty important issue in forex investing. Under FCA control, brokers cannot provide investors with excessive leverage. The higher the leverage, the greater the risk on their account.
As for the CySEC regulation, forex brokers that are regulated by CySEC must limit their leverage as follows:
- Trading CFDs on major forex pairs has a maximum leverage of 1:30.
- Trading stock indices, non-major forex pairs and gold has a maximum leverage of 1:20.
- Trading in other commodities and non-major stock indices has a maximum leverage of 1:10.
- Shares trading in the form of CFDs has a maximum leverage of 1:5.
- Cryptocurrency trading in the form of CFDs has a maximum leverage of 1:2.
This only applies to customers located in the EU. XM is a CySEC licensed forex broker so their EU clients must also accept these leverage levels.
Should you use leverage in forex trading?
Actually there is no definite answer for this question. Whether you should apply leverage to your trades or not depends on the situation you're in.
There are a lot of things you need to consider to answer this question. Take a look at your trading strategies, financial goals, initial funds, and your acceptable loss. The forex market contains risk, just like any other markets. The higher the leverage, the more risk you're facing.
Therefore, consider a low leverage when you just start forex trading in order to reach the profit goal you want. Anyone in this field can agree that a forex beginner should start trading with leverage ranging from 1:5 to 1:100 only.
About XM broker
This is one of the uncommon brokers that offers and let you work with both of Meta trader’s platforms, which are MT4 and MT5. It’s a Forex broker that is owned by the trading point of many financial instruments company. Also, this is a broker that is based in Cyprus. Using the leverage in the XM broker means that you are now able to trade some positions larger than the amount of capital in the account you are using. The 1:888 leverage that the XM broker offers is unique in the trading market.
It is easy to read and to understand, for example: if you have $1,000 in your XM account and you trade position sizes of 400,000 USD/JPY, your leverage is going to be 400:1.
Also, in the XM broker you can trade about 60 currency pairs and over 100 financial instruments, and better, it can be done through your phone on 8 advanced trading platforms.
One of the benefits of the leverage in XM is that you can make more decisions. For example, you can decide if you want to make an intensification in the leverage you are using or if you want a diminution of it.
The XM leverage is going to depend on the type of your account because you can choose your leverage on a scale from 1:1 to 1:888.
The leverage in XM varies by account classification; it will depend on the account that you choose to work with. For example: if you use a Micro the leverage conditions will be of 1000:1, if you use a standard 400:1, and if you use an executive the leverage conditions are going to be of 300:1.
Now, the margin requirements are not going to change during the week. At XM you can have the option to demand either the increase or the decrease of your chosen leverage.
XM Support services
The XM broker offers a 24/5 customer support, you can ask for help on it, they provide you additional information and extra assistance. The support service is available in different languages: Arabic, Bulgarian, Greek, German, Hindi, English, Polish, Spanish, Slovakian, Malay, Korean, Italian and Japanese. When you are trying to understand the leverage, this is essential.
When you use XM, you need to know what are the instruments that XM allows, because that will be useful if you try to understand the leverage.
Check XM support team
What is leverage? What is margin?
It is essential to know the difference between Leverage and margin because sometimes it can be confusing.
The leverage is just the act of taking on debt; meanwhile, if we talk about margin, the right definition will be “a form of debt or borrowed money that is used to make a kind of investment in other financial instruments.”
In XM you can control the used and free margin, you can also control its risk exposing. In XM they try to make a good trader out of you, so they are one of the brokers that will make a margin call; that means that it will make you a call when your maximum risk is surpassing the equity of your account
XM and its leverage are perfect for you if you are starting in this business; remember that it requires time and effort. Try not to make some of the constant mistakes of the trading beginners, like trading in multiple markets. The XM broker has a lot of benefits that will help you in your way to becoming a great trader.