Pepperstone Leverage

During my Pepperstone analysis, I took an in-depth look at leverage, as Pepperstone operates seven global entities with different rules and regulations. Leverage impacts the competitiveness of the trading environment. Therefore, I recommend traders consider the findings of my Pepperstone leverage analysis to make the best decision for their portfolios.

What Is Pepperstone Leverage?

Pepperstone leverage allows traders to control a higher position by borrowing capital from the broker. For example, 1:400 leverage means that for each $1, traders can control a $400 position.

Pepperstone charges swap rates on leveraged overnight positions, increasing final Pepperstone fees per trade. It will also close positions if the account margin drops below 50% to protect itself and its traders.

Regulation and CFD Leverage Limits at Pepperstone

My Pepperstone review found that the Pepperstone regulating entity determines the maximum leverage. Please note that Forex traders receive the most leverage and that the trader’s Pepperstone account type may impact settings.

Here are the regulation and leverage limits at Pepperstone:

1. Regulator: ASIC (Australian Securities & Investments Commission)

• Complaints Authority: Australian Financial Complaints Authority
• Compensation Scheme: No
• Maximum Forex Leverage: 1:30

2. Regulator: SCB (Securities Commission of The Bahamas)

• Complaints Authority: Securities Commission of Bahamas
• Compensation Scheme: No
• Maximum Forex Leverage: 1:200

3. Regulator: CySEC (Cyprus Securities and Exchange Commission)

• Complaints Authority: The Financial Ombudsman of the Republic of Cyprus
• Compensation Scheme: Investor Compensation Fund (ICF), up to €20,000 or 90% of assets per eligible investor
• Maximum Forex Leverage: 1:30

4. Regulator: DFSA (Dubai Financial Services Authority)

• Complaints Authority: Dubai Financial Services Authority
• Compensation Scheme: No
• Maximum Forex Leverage: 1:30

5. Regulator: BaFin (Federal Financial Supervisory Authority)

• Complaints Authority: EU Online Dispute Resolution Portal of the European Commission
• Compensation Scheme: Deposit insurance of German banks (EdW), up to €20,000 or 90% of assets per eligible investor
• Maximum Forex Leverage: 1:30

6. Regulator: CMA (Capital Markets Authority)

• Complaints Authority: Capital Markets Authority
• Compensation Scheme: No
• Maximum Forex Leverage: 1:400

7. Regulator: FCA (Financial Conduct Authority)

• Complaints Authority: Financial Ombudsman Service
• Compensation Scheme: Financial Services Compensation Scheme, up to £85,000 per eligible investor
• Maximum Forex Leverage: 1:30

Protections Received by All Pepperstone Traders

• Segregated client deposits from corporate funds
• Negative balance protection
• Mandatory 50% margin closeout

How Leverage Works in CFD Trading

Before traders consider Pepperstone leverage, they should consider depositing more than the Pepperstone minimum deposit.

Here is an example of how leverage works in CFD trading:

• The EUR/USD has a maximum leverage of 1:400
• In this example, the price of the EUR/USD is 1.0850
• A trader wants to buy 2.0 standard lots (1.0 standard lot equals 100,000 currency units). Without leverage, the position size would be $217,000 (1.0850 x 200,000)
• The trader has a $5,000 portfolio, which can only buy 4,608 currency units or 0.04 lots (rounded down to 4,000 currency units, as most brokers have a minimum increment of 0.01 lots or 1,000 currency units)
• With 1:400 Pepperstone leverage, the trader will only pay $542.50 for the 2.0 standard lot trade ($217,000 / 400)

Pepperstone Leverage by Asset Type

The maximum Pepperstone leverage depends on the entity and asset. The trading platform lists the maximum leverage per asset under contract specification. Traders must also understand that not all assets within an asset class qualify for maximum leverage, as liquidity determines maximum leverage, and less liquid assets have lower leverage and higher margin requirements. It assists Pepperstone and its traders with risk management. Traders can use the Pepperstone demo account to evaluate the Pepperstone leverage without risk.

Can You Set Leverage Manually at Pepperstone?

Pepperstone is one of the few brokers allowing traders to set their leverage manually, but they cannot exceed the maximum Pepperstone leverage. Traders using the Pepperstone Islamic account should confirm with their account manager about leverage settings.

How Do You Change Leverage in Pepperstone?

Traders can change the Pepperstone leverage from the secure client area by clicking on the small pen icon next to their trading account followed by “Change Leverage.” The drop-down menu will display available leverage settings.

Pepperstone Leverage – Pros and Cons

Traders must evaluate the pros and cons of the Pepperstone leverage settings, as they will impact margin requirements and can influence the Pepperstone withdrawal.

The Pros of Pepperstone Leverage

• Flexible leverage settings
• Negative balance protection
• Automatic stop-out levels
• Reasonable swap rates

The Cons of Pepperstone Leverage

• The Pepperstone regulating entity determines the competitiveness of the Pepperstone leverage settings

Bottom Line

The Pepperstone regulating entity determines the maximum Pepperstone leverage, and Forex traders receive the most generous maximums, but all entities have an automatic 50% margin closeout. Traders must master the relationship between leverage and risk management and how lot sizes impact risk management before using Pepperstone leverage.

FAQs

What is the margin at Pepperstone?

The margin traders must pay at Pepperstone depends on the assets, and the entity traders deal with, as leverage impacts margin requirements. For example, 1:400 Forex leverage yields a margin requirement of 0.0025%.

What is the maximum lot size at Pepperstone?

The maximum lot size per single trade is 100 standard lots, and traders can have up to 200 open trades at any point in live portfolios. It totals 20,000 lots or 2,000,000,000 currency units.

What is a 1:500 leverage strategy?

Traders using a 1:500 leverage strategy will only trade assets that offer 1:500 leverage, the industry standard for major currency pairs.

Is 1:30 a good leverage ratio?

1:30 represents uncompetitive leverage available at tier-1 regulators except in New Zealand, Japan, and Singapore. Each trader must decide if they consider 1:30 leverage sufficient, but globally, it ranks among the worst maximum Forex leverage offers.

How much leverage does the broker Pepperstone give?

The leverage given to traders at Pepperstone depends on which entity they deal with and which asset they trade. The maximum retail Forex leverage is 1:400, but it can be as low as 1:30.

By DailyForex.com Team

The DFX Team at DailyForex is a group of veteran financial analysts, traders, and brokerage industry experts dedicated to producing in-depth broker reviews and cutting-edge market insights, plus analysis of market trends. Holding over 16 years of experience in global financial markets, and 4 B.A. level academic qualifications in relevant degrees, we conduct thorough, unbiased evaluations of brokers to enable traders make informed decisions, using the most advanced methodology in the industry. Also, the DFX team is involved in generating technical analysis, signals, and trading strategies, with a consistent commitment to accuracy and transparency. Whether you’re a beginner or a professional trader, the DFX Team works to ensure you have the tools and insights you need to succeed as a trader in the retail CFD industry.