Dynamic leverage is a mechanism that dynamically reduces the amount of leverage required in real time to protect your account from excessive exposure.
It is considered a risk management tool that is used to balance the risk appetite of traders by allowing them to maximize their trading potential, taking into consideration the market risks that they are exposed to, particularly when trading larger volumes.
At Global GT, the maximum leverage offered is up to 1:1000. This offers traders the possibility to trade large contract sizes with a fraction of required margin.
i.e. for 1 lot of USDJPY with a contract size of 100,000, a margin of USD 100 is required.
The larger the volume traded, the lower the leverage hence the higher the margin. The higher the leverage, the more profit can be achieved, but in the same way, trading risk also increases. This is where dynamic leverage comes in.
The way it works is that it automatically adjusts the level of leverage based on different volume tiers. These tiers vary depending on the type of instrument and the risk profile associated with each asset class.
A sophisticated dynamic leverage mechanism is something that every trader should look for in their broker. The Dynamic tier levels that are applicable for each asset class are available here below: