Frequently Asked Questions


Plus500 Leverage Trading in 2021 - Full Guide

Plus500 is a London Stock Exchange-listed universal CFD broker established in 2008 in Israel. It is licensed and regulated by many international financial authorities, including top-tier ones like the Australian Securities and Investments Commission (ASIC) and the UK’s Financial Conduct Authority (FCA). The broker is considered secure because it is listed on a stock exchange and is also regulated by these top-tier financial authorities. On this broker, traders have the option to trade with leverage. So, you need to learn what leverage is and how you can apply it to your trades on Plus500. 

72% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you can afford to take the high risk of losing your money.

 
Plus500
Plus500 Website

Overview:

  • Minimum Deposit: $100
  • Maximum Leverage: 1:30 (T&Cs apply)
  • Tradable Assets: over 2000
  • Regulated by: Plus500AU Pty Ltd. is Authorised Financial Service Provider (#47546) in South Africa
  • Demo Account: Yes

Note: Your capital is at risk

 

What is leverage?

When you start trading, you can opt for applying average to your trade. Leverage allows a trader to open a larger position with a smaller amount. It is displayed as a ratio number. For instance, the leverage on raw material oil can be 1:10. Practically, it means that you can open a position of $1000 when you only use $100 in the trade. 

For more please read Lots and Leverage in Forex

 

 

How to use leverage?

You can apply leverage to all CFDs with Plus500, but you need to know how to use leverage in trading first. By using leverage, you can trade with more money than you have in your trading account. After opening a trading position at Plus500, you can set the leverage you wish to apply.

Before you apply leverage, understand what it does to the potential profit and potential loss you may achieve with a trade. If you purchase $100 worth of shares, you would get the following results:

  • The share may increase by $10 and you would make a 10% profit.
  • The share may decrease by $10 and you would make a 10% loss.

 

Leverage makes sure that both your profits and losses can increase quicker. If you apply 1:10 leverage to the trade mentioned above, you will get these results:

  • If the share increases by $100, you will make a 100% profit.
  • If the share decreases by $100, you will make a 100% loss.

 

As you can see, when leverage is applied, both profits and losses can escalate faster. Therefore, it is very important to monitor the risks of your trades carefully before applying leverage.

 

 

Taking care of margin

While trading with leverage, you need to keep an eye on margin. When a trading position is opened with leverage, a big percentage of the position is financed by the broker. You must keep a close eye on the needed margin to keep your position open. If the maintenance margin is 5%, the trader must always have 5% of the total value of their trade in their account. If the trader invests $100 with 1:10 leverage, a position worth $1000 can be opened. With a 5% maintenance margin, you should always have minimum $50 in your account to keep your position open.

 

 

Plus500 CFDs Leverage Details

Leverage on Plus500 varies by the financial assets traded on the platform. The leverages offered on different assets are as followed:

  • Plus500 Forex CFDs Leverage

Forex currency trading is one of the most popular assets traded globally, and it is the same on the Plus500 platform. You can trade more than 70 forex pairs with the main base currencies of the top pairing, such as the Australian Dollar (AUD), British Pound (GBP), Euro (EUR), United States Dollar (USD), Japanese Yen (JPY), Swiss Franc (CHF), New Zealand Dollar (NZD), Canadian Dollar (CAD), South African Rand (ZSR), Singapore Dollar (SGD), Danish Krone (DKK), and Czech Koruna (CZK). With currency pricing movement on average single figures, it is critical to apply leverage in order to make substantial net profits with successful trades. Most forex brokers offer the highest leverage to forex, and Plus500 is no exception. The broker offers 1:30 leverage for forex currency trading.

 

  • Plus500 Crypto CFDs Leverage

Plus500 offers crypticurrency CFD trading with leverage. Maximum leverage for crypto CFD is lower than the other assets becayse of the high risk and volatile nature of this instrument. Volatile can be double digits on some days and it can lead leveraged positions to significant gains or losses. The broker offers cryptocurrency CFD trading on several cryptocurrencies, such as Bitcoin, Bitcoin Cash ABC, NEO, Ethereum, Ripple XRP, Litecoin, IOTA, Stellar, EOS, Cardano, Tron, and Monero. For all crypto CFDs, the leverage offered can go up to 1:2.

 

  • Plus500 Index CFDs Leverage

Plus500 index CFDs provide both sector indices and country indices trading for retail traders. The country indices include the ASX 200, ES USA 500, NIY Japan 225, SPI200, and UK100. The sector indices include the BGGANG Cannabis Stock Index, BUKHI50P UK Brexit High 50 Index, BUBIOG US Biotech Giants Index, FNG NYSE FANG+ Index, and BUSCYG Cybersecurity Giants Index. Index CFDs leverage on Plus500 is levelled with forex trading at 1:20 leverage. Since high leverage comes with high risks of great losses alongside of chances of huge gains, it is vital to understand the risks of CFD trading.

 

  • Plus500 Share CFDs Leverage

Plus500 allows trading on the most popular shares provided by major exchanges, from the USA to Australia and the UK. Markets where share CFDs are available are Australia, USA, Hong Kong, UK, Germany, France, Italy, Japan, Singapore, Holland, Finland, Belgium, and Ireland. Individual shares may have huge movements at the time of major economic and corporate events. These include company announcements, annual reporting, industry changes, and changes to domestic economies. The leverage available across all Australian forex brokers is 1:5 due to these fluctuations. You should use features like guaranteed stop loss order with your trades while trading share CFDs to reduce the high risk and limit exposure to the market.

 

  • Plus500 Commodity CFDs Leverage

Plus500 offers commodity classes from Gold, Silver, and Oil to traders to trade as contracts for difference (CFDs). With commodity CFDs, traders do not own the commodity. Instead, they trade according to movements. The most popular commodities offered on the platform are Gold, Copper, Oil, Gasoline, Platinum, Palladium, Wheat, Heating Oil, Soybeans, Silver, Natural Gas, Cotton, Coffee, and Cocoa. On Plus500, leverage for commodity CFDs is offered up to 1:10, except for Gold which has leverage up to 1:20.

 

  • Plus500 ETFs Trading Leverage

The final instrument class on Plus500 that offers leverage is Exchange Traded Funds (ETFs). The broker offers more than 90 ETFs for traders to trade those as CFDs. The leverage available for these ETFs is 1:5. ETFs are known to have large movements when market-sensitive information is published. Based on this, the negative balance guarantees provided by CFD brokers are needed to be understood. It means that a trader cannot have a balance less than their deposit. Even if such situation arises because of slippage during extreme market volatility, the trader will not lose all their money. Instead, Plus500 would pay the difference. Due to this reason, many traders may consider keeping the balance on the lower end and have only the amount they can afford to lose in the account.

 

 

Risk Management

Risk is amplified by applying leverage to a trade and it cannot be reduced. So, as a trader, you must know the risk management features of Plus500. One of the features is the guaranteed stop loss order that you can only place on new orders. Once the stop loss order is placed, you can choose the maximum amount you are willing to profit or loss on the trade. Even when conditions do not allow Plus500 to exit the trade, the broker still follows the amount set. Losses on the trade do not exceed this amount under any circumstances. However, please note that you need to pay an additional fee to use the stop loss order on Plus500.

Another important risk management feature of the broker is negative balance protection. It makes sure that a trader’s losses do not exceed their deposit. It is a common occurrence when losses exceed their deposit during extreme market events. It would never be the case for Plus500 as the broker is based on the negative balance protection feature.

 

 

Conclusion

The leverage levels offered by Plus500 should generally suit most traders. However, the traders cannot change the leverage levels while using Plus500 as CFD broker. It applies to all instruments. So, it is not for traders that want flexibility regarding leverage. The broker may also not be suitable for traders that are risk-averse for the same reason. However, that is only a minority of traders. Hence, the leverages offered by Plus 500 must still suit most individuals’ CFD trading requirements.

For more please read Plus500 Broker Review

Note: Your capital is at risk

 

 

FAQ

1. Can you change leverage on Plus500?

No, you cannot change the leverage levels on Plus500 when you are using it as your CFD broker.

2. What leverage should a beginner use?

Leverage is associated with high risks. So, it is best for a beginner to use low leverage, like 1:5 or 1:10.

3. Can you lose more than you invest with leverage?

Yes, leverage increases potential risks as well along with potential profits from a trade.

4. What is the best leverage for $1000?

The best leverage for $1000 depends on how much you are willing to lose on a trade.

Risk Warning: Trading may not be suitable for everyone, so please ensure that you fully understand the risks involved. Especially trading leveraged products such as Forex and CFDs carry a high degree of risk to your capital and can result in the loss of your entire capital. Only invest with money you can afford to lose.