Brokers With Low Leverage

Brokers with low leverage enable traders to manage risk when trading derivatives. Higher leverage means greater risk. This guide explains how trading with low leverage works and examines common leverage ratios and models. Read on for a list of the benefits and drawbacks of trading using lower leverage accounts. We have also ranked and compared the best companies and brokers with low leverage in 2023.

Brokers With Low Leverage

#1 - Interactive Brokers

Interactive Brokers is a leading global brokerage that provides access to a comprehensive offering of stocks as well as forex, futures, metals, bonds and cryptos. The firm has over 40 years experience in the online trading industry and is heavily regulated by SEC, FCA, IIROC, and SFC. Day traders can use the proprietary Trader Workstation and can access powerful tools and data feeds as well as comprehensive educational resources.

"Experienced day traders seeking a regulated broker with sophisticated trading software and very low fees should look at IB. Their range of stocks also can't be beaten."

- DayTrading Review Team
  • Instruments: CFD, Forex, Stocks, Crypto, Futures, Options, Commodities
  • Regulator: SEC, FCA, IIROC, SFC
  • Platforms: AlgoTrader, OmniTrader, eSignal, TradingCentral
  • Min. Deposit: $0
  • Min. Trade: $100
  • Leverage: 1:50

Pros

  • Commission reimbursement with Toggle AI
  • You have a reliable real-time market data feed, that rarely goes offline
  • Direct market access, including to the FTSE 100 index, the CAC 40 and Germany’s DAX 40

Cons

  • Accessing products like CFDs is not straightforward compared to competitors
  • Platform and web interface are complex and difficult for beginners to pick up
  • The TWS platform falls short in terms of technical charting

#2 - IG Group

IG is an award-winning broker that has an excellent reputation globally. The brand-US offers spread betting, CFD and forex trading across a comprehensive suite of markets. IG is also multi-regulated, provides a great trading app and has 50 years experience.

"IG offers a superb all-round package. Beginners will appreciate the user-friendly web platform and secure trading environment while established investors will rate the 17,000+ markets and top-tier market research."

- DayTrading Review Team
  • Instruments: CFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting
  • Regulator: FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA
  • Platforms: MT4, AutoChartist, TradingCentral
  • Min. Deposit: $0
  • Min. Trade: 0.01 Lots
  • Leverage: 1:30 (Retail), 1:250 (Pro)

Pros

  • Share dealing and ISAs are available for longer term investing
  • Users have access to a comprehensive range of charts, market news, client sentiment data, and analysis tools
  • Opening an account takes less than 5 minutes

Cons

  • Inactivity charge
  • No copy trading platform

#3 - Kraken

Kraken is a leading cryptocurrency exchange with a proprietary trading terminal and a list of 220+ tradeable crypto tokens. Up to 1:5 leverage is available with stable rollover fees on spot crypto trading and up to 1:50 on futures. The exchange also supports crypto staking and has an interactive NFT marketplace.

"Kraken will suit traders looking for a diverse list of cryptos including Bitcoin and a good security track record."

- DayTrading Review Team
  • Instruments: Cryptos
  • Regulator: FCA, FinCEN, FINTRAC, AUSTRAC, FSA
  • Platforms: AlgoTrader
  • Min. Deposit: $10
  • Min. Trade: Variable

Pros

  • Very good security track record with no hacks in a decade since launch
  • Excellent range of 220+ more established cryptocurrencies
  • 50x leverage on futures trading

Cons

  • Does not accept fiat deposits
  • Low leverage on spot trading
  • Does not support many newer altcoins

#4 - Gemini

Gemini is a crypto exchange offering 90+ cryptocurrencies, a native stablecoin and derivative trading via perpetual swaps. The two proprietary platforms will suit beginners and experienced traders, execution is fast with low slippage and fees are competitive.

"Gemini is a great platform for traders looking for a straightforward way to trade crypto derivatives in a secure environment."

- DayTrading Review Team
  • Instruments: Cryptos
  • Regulator: NYDFS, MAS, FCA
  • Platforms: AlgoTrader, TradingView
  • Min. Deposit: $0
  • Min. Trade: 0.00001 BTC

Pros

  • Gemini has won various awards in recent years, including the 2019 Markets Choice Awards: Best Cryptocurrency Exchange
  • There is a wealth of education, guides and tutorials suitable for both beginners and novice investors
  • High security with 2FA a requirement for all crypto investors

Cons

  • There is no practise profile or demo account for prospective traders
  • Trading on margin is not supported
  • Some of the top coins by market cap are not available to buy through Gemini

How Does Leverage Work?

In basic terms, leverage trading works in a similar way to borrowing. Your broker lends you money to open larger position sizes, and in turn, you can make a greater profit.

Leverage is often shown as a ratio which represents the balance of the loan capital (from the broker) to the value of the full equity (the amount the trader invests).

For example, a broker offering 1:5 leverage means for every $10 invested, you can borrow up to $50. This gives traders the chance to multiply the results of a trade.

Importantly however, trading on leverage can magnify losses. So in highly volatile markets, such as cryptos, you can use lower leverage to protect yourself from losing money quickly. This is also why brokers with low leverage are popular with traders starting out.

Examples

Let’s say a trader starts with a $100 deposit, and their broker offers a 1:10 leveraged ratio on commodities. This means that they can trade in positions up to ten times the value of their available balance, so a maximum of $1000.

They invest $1000 in crude oil and the value of crude oil rises by 10%, so the trader earns $100 in profit ($1000 * 1.1 = $1100). However, if they had purchased $100 worth of crude oil without leverage on the same trade, their profit would be $10 ($100 * 1.1 = $110).

Brokers with low leverage definition and meaning
Axi: Leveraged Trading Explained

Alternatively, say a trader has a $100 deposit and their broker offers higher leverage at 1:100. They invest $10,000 ($1000 * 100) in Apple stocks but the value of the stock plummets by 10% so the trader loses $1000 ($10,000 * 0.9 = $9,000), 10 times their initial deposit.

So, while leveraged trades can magnify your profits, brokers with low leverage can help avoid larger losses.

Note, the examples above do not take into account any fees you may have to pay to trade on margin.

What Is Considered Low Leverage?

Generally, low leverage is considered to be below 1:30. However, leverage can vary depending on the markets you’re investing in.

The most trusted brokers that offer lower leverage are regulated by the FCA (UK), ASIC (Australia) and CySEC (Europe). These financial watchdogs typically limit leverage rates based on the market in question. Common leverage ratios include:

Pros Of Brokers With Low Leverage

Cons Of Brokers With Low Leverage

How To Choose Brokers With Low Leverage

The key factors to consider when selecting a trading account with lower leverage include:

Final Word On Brokers With Low Leverage

Brokers with low leverage offer clients the opportunity to benefit from trading on margin without the risks that higher leverage can bring.

It’s important to remember, however, that any form of leveraged trading can result in unpredictable losses. Beginners should open demo accounts to practise trading on margin, and ensure that they select the most trusted broker to protect their capital.

Nevertheless, low leverage is ideal for cautious investors looking to steadily build profits. See our list of the best brokers with low leverage trading to get started.

FAQs

Is Low Leverage Better For Beginners?

Whether you’re trading crypto, forex, stocks or bonds, for beginners a lower leverage ratio is good. This helps to reduce losses, which are more expected with newcomers who may make mistakes. Fortunately, most EU, UK and Australian-regulated trading brokers cap leverage for retail traders to 1:30.

Who Are The Top Regulated Brokers With Low Leverage?

Many of the best brokers offer low leverage options, and choosing a platform will depend on your individual needs. Some of the top low leveraged trading firms include XM, AvaTrade, eToro, Capital.com, Pepperstone and IG.

What Does Low Leverage Vs Low Margin Mean?

Leverage and margin both involve borrowing funds to trade. A leveraged position means a trader has taken on debt, while the margin is the actual money/ratio i.e loan taken to invest in financial markets. Both terms are often used interchangeably.

What Countries Allow Low Leveraged Trading?

Leveraged trading is regulated and legal in numerous countries across the globe. For example:

Note, in 2021 India banned the retail trading of many leveraged products.

What Is The Difference Between Professional And Retail Leverage?

Professional and retail leverage refers to the different rates and regulations that accompany professional and retail accounts. Professional leverage access requires a high balance sheet, turnover record and evidence of investment activity.

Retail leverage accounts have a lower leverage structure imposed by various regulatory authorities which limits leverage on different assets. For example, crypto trading is commonly capped at 1:2 due to the volatility of the market.