What Is 1:50 Leverage? A Full View On Risk

In this article, we are going to break down 1:50, or 50x leverage, as it’s also called when mentioned.

What does this ratio actually do, and how does it affect the risk you’re taking when you trade?

Perhaps you have already traded with this level of buying power, you maybe you just found out about this concept.

After reading, you should understand how this ratio changes risk exposure so you can judge if it even fits your approach.

Key takeaways

A 1:50 ratio allows a position to become 50 times larger than your deposited capital, which multiplies the size of every mistake and every market move.
If someone chooses to trade with this ratio, they need strict risk controls first, long before thinking about entries, strategies, or platforms.

What does 1:50 leverage mean?

Trading the financial markets with 1:50 leverage means that you can control a position size that is 50 times larger than your initial deposit.

For every $1 in your trading account, you can now trade with $50.

For example, let’s say that you deposit $100 into your account and use 50x more money, this means that you can now trade with $5000.

Below is a table that demonstrates the effect of this ratio affects position size and your profit/loss:

Initial Capital ($)	Leverage	Trading Position ($)	Potential Profit/Loss per 1 Pip Movement ($)
100	1:50	5,000	0.5
500	1:50	25,000	2.5
1,000	1:50	50,000	5

What is the margin requirement for this ratio?

The margin requirement for trading with 1:50 leverage is 2% and does not change even when you change the position size.

Margin Requirement = (1 / Leverage) x 100

So, if you’re using 50x (or 1:50):

Margin Requirement = (1 / 50) x 100 = 2%

To explain further how the margin requirement works when trading with a multiplier, take a look at the table below:

Leverage	Margin Requirement ($) for $10,000 Trade	Margin Requirement (%)
1:1	$10,000	100%
1:10	$1,000	10%
1:50	$200	2%
1:100	$100	1%
1:200	$50	0.5%
1:500	$20	0.2%

ThImportant notes on 1:50 leverage

Before thinking about 50x leverage, you need one thing clear: position size grows faster than judgment. That’s the real risk.

Leverage doesn’t change your skill. It only magnifies your exposure.

When 1:50 is applied, one dollar no longer behaves like one dollar. It behaves like fifty. That sounds powerful, but it also means you can lose fifty times faster.

In forex, position sizes are measured in lots, not dollars:

Standard lot: 100,000 units
Mini lot: 10,000 units
Micro lot: 1,000 units
Nano lot: 100 units

These units control how much price movement affects your account. The larger the lot, the larger every tick or pip becomes.

Example. Trading one standard lot of USD/GBP means you’re exposed to 100,000 units. If the exchange rate is 1.10, the real exposure is about $110,000. Without leverage, that is the full capital requirement.

With a 1:50 ratio, the required margin drops to roughly $2,200. The exposure doesn’t shrink, only the deposit does. That’s the key detail many traders misunderstand.

Lower margin does not reduce risk. It simply makes the same risk easier to enter. Small deposit. Large consequences.

How 1:50 leverage compares to other ratios

Let’s look at four different ratios and how they compare against 50x.

1. No (1:1)

You are limited to your own trading capital.

Margin requirement: Limited to the trader’s own capital.
Risk: Losses are limited to the depsited margin capital.

2. Low (1:2)

You can control twice as much money, your risk is doubled.

Margin requirement: Each dollar controls $2 in the market.
Risk: Higher than the spot market assets, but still low.

3. Medium (1:50)

You now control $50 per invested dollar, your risk is outsized.

Margin requirement: Each dollar controls $50 in the market, increasing the trade size drastically.
Risk: Much higher, losses can grow fast.

4. High (1:100)

You trade with 100 times larger position sizes, the risk is extremely high and not suited for most traders.

Margin requirement: $1 controls $100 in the market.
Risk: Extremely high, losses can be surprisingly large.

How 1:50 leverage affects losses

To show you the effect that leverage has on profits, especially when using 1:50, I’ve created a table to demonstrate:

Initial Capital ($)	Leverage	Trade Size ($)	Price Movement (%)	Profit/Loss
				Without Leverage ($)	With 1:50 Leverage ($)
1000	1:50	50000	+5	+50	+2500
1000	1:50	50000	-5	-50	-2500
2000	1:50	100000	+3	+60	+3000
2000	1:50	100000	-3	-60	-3000

What are the drawbacks of 1:50 leverage?

In this section, I thought I would write down the most significant drawbacks:

Amplified losses: The risk of loss is greatly increased when trading with leverage, especially with 50x. On a trade where you would normally lose $5, you would now lose $250. Be cautious of the loss potential.
Fast losses: Not only do the losses get bigger, but they amount much faster. The loss per pip or loss per point might surprise you when you first attempt to trade with borrowed capital.
Complex: Margin adds complexity to trading that you need to adjust to before putting real capital to use.
Increased trading costs: Leveraged trading commissions scale linearly with the ratio you have chosen. Your fees are also increased 50 times. On a trade where you normally would pay $0.20 per trade, you now have to pay $10.

Final words

A 1:50 ratio gives access to a larger position. It does not improve skill. It does not protect capital. It only makes every decision carry more weight.

If your discipline is weak, the leverage will expose it immediately. That’s the real test.

For most traders, starting lower is simply practical. Ratios like 1:2, 1:5, or 1:10 leave more room for mistakes, and mistakes do happen. Everyone makes them. The difference is how much a single error can cost.

A demo account can help you learn execution and order placement, but it won’t teach emotional control. Real risk does that. And real risk should only be taken when you’re ready for it.

The actual edge in leverage trading is not in the multiplier. It’s in how you control exits, size positions, and manage your margin. Strategy is optional. Risk management isn’t.