eToro leverage explainedTrading within an eToro account, or any other major forex broker for that matter,  you may want to explore using leverage to increase the size of your trades.

Leverage can be a very useful tool if employed in the correct capacity and quite risky if not.

Through this piece, we are hoping to let you know all about the eToro leverage which is available to you.

We will also take a look at the cost of leverage and what levels are available on each eToro trading asset.

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What is leverage?

This is a more common question than you may think. Outside trading, it is quite unlikely that you will have come across this term in the same context.

Leverage is the amount of times more than the principal balance that you can invest.

For example, if your balance is $1,000 and you are trading with leverage of 30:1, then you have $30,000 available to invest.

It is important to note though when you are trading on leverage, that this is money that is borrowed from the broker. This does free you up to invest in larger volumes than previously, but you should also think of this as a style of loan, remembering that it does have to be repaid, so this risk level does increase in tandem with the leverage.

Leverage availability varies from country to country based on a number of factors.

A primary influence on this is the regulation in a particular area. In the EU for example, ESMA regulations prohibit the provision of leverage beyond 30:1.

How does leverage work?

As with anything, including trading with eToro and other brokers, a minimum deposit is required. As mentioned above there are also some restrictions in place depending upon the regulatory body that oversees your region.

The function of leverage though is simple, that is to make trading more accessible to every trader in the market. Movements in any particular market can be small, this, therefore, means that in any particular market, you can amplify movements with the use of leverage.

As mentioned above, you suddenly have much more trading power. Even in the case of EU based traders where regulations are firm, a $1,000 balance from you can provide trading of up to $30,000 in value across multiple major trading markets.

etoro leveraged example

Leverage fees

Naturally, when trading on leverage, because this is for the most part, not your money, there are a few fees to contend with.

When you are trading any asset on leverage, you are effectively trading them as CFDs, though eToro stock trading does allow for 1:1 trading in major stocks where you can own the assets. Essentially, you are hoping for the CFD value to change in your favor so that you will be left with a profit less your finance and associated costs.

If you are maintaining your positions overnight, you will also be liable for eToro fees on overnight holding which is common among all brokers in the industry. Some may also include additional financing fees although this does not appear to be the case with eToro.

etoro overnight fee example

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eToro Leverage on different assets

The chart below can be useful if you are looking for precise details on exactly what eToro leverage is available to you under different regulatory bodies and on different assets.

The four regulations which eToro works under are listed here, and you can also find a list of countries where eToro does not offer services.

If you still cannot find or do not know which regulatory body oversees your trading account then you can always contact eToro customer support after reviewing the table.

CySEC/FCACFTCASIC
Forex (major)30:1market not available400:1
Forex (non-major)20:1market not available100:1
Commodities CFDs10:1market not available20:1
Stocks CFDs5:1market not available10:1
Cryptos CFDs2:11:12:1

eToro Leverage when trading real assets

Some assets like eToro stock trading as we mentioned above are eligible to be traded with 1:1 leverage. This is essentially with no additional financing at all.

When you are trading like this, you will encounter some benefits such as no markups on the asset price and no need to worry about those overnight fees anymore, you will also own the underlying asset as you are trading with your own funds only.

eToro cryptocurrency and shares are just two examples of assets that can be traded in this non-leveraged manner. If you meet certain criteria, you can also avail of the eToroX crypto wallet service.

etoro etorox wallet

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(76% of retail CFD accounts lose money)

What’s Margin on eToro?

If you have utilized eToro leverage at all, then there is no doubt you have also encountered margin.

As you are essentially borrowing money when you use leverage, the margin is a percentage of the total which you should have available in order to open and maintain a leveraged position.

In that case, if you wanted to invest $1,000 in an asset using the leverage of 10:1, you would require $100 which translates to a margin of 10%.

To maintain your leveraged position you also need to have a certain amount available in your principal balance. If you fall below this required level then you will not be able to meet your margin call and risk your position being closed.

Is it possible with eToro to lose more money than invested?

With some less trustworthy brokers or types of trading, it may very well be possible to lose more than you have in your account. Luckily on this front eToro negative balance protection kicks in.

This prevents your account balance from going into a negative position and prompts eToro to close your positions and cover any extra debt amount on your account.

Although the company will not ask you to repay any of the excess losses, you will have, of course, lost your complete balance and it is not a recommended route despite the fact that negative balance protection is provided to all eToro traders.

Risk Management

Risk management is a vital part of trading for anyone at any level. You have to be aware of the risks, your own position, and how to manage the goals of both simultaneously. This note particularly applies if you are engaged in leveraged trading.

There are several ways as an eToro trader that you can avoid reaching the point of having to activate your negative balance protection.

Among these is ensuring that you heed your margin call alerts and deposit more funds or close your positions (but please note that depositing more money and risking to lose even more is rarely the best option). This is the basic first step and question which every trader in the same position should ask.

Another way in which you can ensure that your losses do not pile up is to engage stop losses on your orders. These are simply to apply when placing your trade and they set levels, usually of some loss, where positions will be automatically closed in order to preserve your position to a certain extent.

The bottom line on eToro leverage and leveraged trading, in general, is that it does carry a high degree of risk and is something that you should manage and keep a close eye on throughout.

eToro 5 stars
etoro logo
  • Regulated: CySec, FCA, AFS
  • Platforms: Proprietary
  • Min. Deposit: $200
etoro logo
  • Regulated: CySec, FCA, AFS
  • Platforms: Proprietary
  • Min. Deposit: $200

76% of retail CFD accounts lose money