Regulatory caps on the maximum leverage (borrowing) that a retail client may use when trading forex. Leverage multiplies both profits and losses, so many regulators impose strict limits for protection. For example, ESMA limits leverage to 30:1 on major currency pairs, 20:1 on non-major FX, 10:1 on gold and indices, and as low as 2:1 on crypto-currencies. These limits mean a retail trader cannot control more than 30 times their deposit on major FX, reducing risk of catastrophic losses. Other regulators impose similar caps or even stricter ones (e.g. ASIC’s retail leverage limits).

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