{"term":{"slug":"leverage","term":"Leverage","definition":"The ratio of trading exposure to actual capital required. In forex, leverage can be 1:100 or higher, meaning $1,000 controls $100,000 of currency. In futures, leverage is built into the contract specification through margin requirements.","extendedExplanation":"Leverage in prop firm trading is somewhat different from retail trading because you are already trading with the firm's capital. The firm sets leverage limits through position sizing rules, max lot restrictions, and margin requirements on their platforms.\n\nFor forex prop firms, typical leverage ranges from 1:30 to 1:100 depending on the firm and regulatory environment. FTMO offers up to 1:100 for forex pairs. Higher leverage allows larger position sizes but amplifies both profits and losses.\n\nFor futures prop firms, leverage is inherent in the contract design. An ES contract controls approximately $250,000 in notional value with only about $15,000 in margin. Prop firms manage this by limiting the number of contracts you can trade. The effective leverage on a $50K futures account trading 5 ES contracts is roughly 25:1.","exampleWithNumbers":"FTMO $100K forex account with 1:100 leverage: you can control up to $10,000,000 in positions (100 standard lots). But with a 5% daily loss limit ($5,000), trading 100 lots with a 5-pip stop = $5,000 risk -- hitting your daily limit on a single trade. Effective safe leverage is much lower: 5-10 lots (1:5 to 1:10 effective) with reasonable stop-losses.","category":"risk","relatedTerms":["margin-call","position-sizing","lot-size","max-contracts","risk-per-trade"]},"_links":{"self":"https://runvigil.app/api/glossary/leverage","page":"https://runvigil.app/learn/leverage","allTerms":"https://runvigil.app/api/glossary","learn":"https://runvigil.app/learn"}}