Master the Art of Leverage with Eightcap
Leverage is a competitive tool, essential for profitable Forex traders but also one of the most misunderstood concepts in finance. I have tried to clarify Eightcap leverage below to help traders make the most efficient and effective use of Eightcap leverage opportunities.
What Leverage Is and How It Works
Traders can control more substantial trading positions by using leverage, which can magnify profits and losses. Therefore, traders must understand the relationship between leverage and risk management, as it will dictate the trading outcome, not the use of leverage itself.
When traders use Eightcap leverage, they borrow money from Eightcap, for which a daily financing rate applies, known as the swap rate. Eightcap will never lose money, as it will liquidate positions once the trader’s capital falls below a certain threshold. This protects Eightcap and traders from massive losses. Negative balance protection ensures traders never lose more capital than they deposit.
An Example of How Eightcap Leverage Works
- Assume you want to buy 100,000 currency units of the EUR/USD, which is 1.0 standard lot, at 1.0850.
- An unleveraged trader would require $108,500 to open that position.
- The EUR/USD is available with 1:500 Eightcap leverage, meaning that traders must only have 1/500th of the value, or 0.002%, also known as the margin level.
- Therefore, a Forex trader using Eightcap leverage must have $217 to open the above trade.
Noteworthy:
- A 1.0 standard lot position has a pip value of $10, meaning each pip is worth $10.
- Eightcap will issue a margin call when the account margin level reaches 80%.
- Eightcap will automatically close positions when the account margin level reaches 50%.
- Traders should apply strict risk management before using Eightcap leverage.
What Is Eightcap’s Leverage?
The default Eightcap leverage for Forex traders is 1:100. Traders can choose their leverage settings between 1:1 and 1:500. Geographic restrictions can result in a maximum retail leverage of 1:30. Various asset types have different leverage settings.
Eightcap Leverage by Asset Type
Not all assets within a sector qualify for the maximum Eightcap leverage.
Here is the maximum Eightcap leverage by asset:
- Forex - 1:500
- Cryptocurrencies - 1:20
- Commodities - 1:100
- Indices - 1:200
- Equities - 1:5
How Do You Change Leverage at Eightcap?
While the default Eightcap leverage is 1:100, traders can change their Eightcap leverage through the secure and user-friendly client portal.
A Step-by-step Guide to Changing Your Eightcap Leverage H3
- Log into your client portal.
- Navigate to “Trading accounts” in the left-hand section.
- Click the pencil button under the “Leverage” section of the trading account.
- Choose your desired maximum Eightcap leverage and follow the on-screen instructions.
- Review the pop-up with the client agreement changes.
- Confirm your Eightcap leverage change.
- Eightcap will review the request and adjust the Eightcap leverage accordingly.
Eightcap Leverage - Pros and Cons
Traders must consider the pros and cons of the available Eightcap leverage to choose the settings that suit them the best.
The Pros of Eightcap Leverage
- Competitive maximum leverage.
- Dynamic leverage which decreases with an increase in account equity.
- Negative balance protection.
- Ability to set maximum Eightcap leverage settings.
- Margin call at 80% account margin level.
- Automatic stop-out at 50% account margin level.
- Competitive swap-rates on leverage overnight positions.
The Cons of Eightcap Leverage
- Insufficient education on leverage, how to use it, and its relationship to risk management.
Bottom Line
Eightcap leverage is one of the most competitive trading tools, but traders must learn and understand its relationship to risk management before using it.
For Additional up-to-date information on Eightcap, you may review the below:
- Eightcap review
- Eighttcap Minimum Deposit
- Eightcap Demo Account
- Eightcap Fees
- Eightcap Withdrawal
- Eightcap Account Types
FAQs
What is the safest leverage?
The lower the leverage used, the safer it is.
Is 10x leverage risky?
10x leverage magnifies losses by a factor of 10, so it is risky as in the event of an unexpected and sudden price surge, your losses could be most or even all of your account. However, such events are quite rare in the Forex market.
What is the best leverage for a beginner?
There is no best leverage for beginners or other traders, as it all depends on risk management. For example, if a trader sets risk management to 2% of equity, the maximum loss should not exceed that level. Leverage only shortens the distance a position can go against a trader’s position before the 2% level triggers an exit.
What is the leverage at Eightcap?
The Eightcap maximum leverage ranges between 1:1 and 1:500, dependent on factors including the geographic location of traders, their asset type preferences and account equity. The latter results from dynamic leverage, where the maximum decreases with an increase in account equity to assist risk management for traders and Eightcap.