An overnight leverage reset is a deceptive broker practice where the leverage available to traders is drastically reduced after market close or during low-liquidity hours—typically without proper warning. While often justified as a risk management measure, scam brokers use this tactic to trap traders in margin calls, force stop-outs, or invalidate positions, especially during news events or at rollover.

In this article, we’ll explore how the overnight leverage reset works, why it’s used, and how to protect yourself from leverage that changes when you’re not watching.

What Is an Overnight Leverage Reset?

An overnight leverage reset happens when a broker:

• Lowers your leverage from 1:500 to 1:100, 1:50, or even lower
• Applies this change after market hours or at rollover (5pm EST)
• Does so without clear prior notice or transparency
• Targets specific days (Fridays, weekends, NFP weeks, holidays)

This affects open trades, resulting in:

• Increased margin requirements overnight
• Forced liquidation of trades due to insufficient margin
• Unexpected losses when you log in the next morning

How the Scam Works

1. Trader Opens Position With High Leverage

You open a position using, say, 1:500 leverage. This means you need only a small margin to control a large trade.

2. Leverage Drops Overnight

At a scheduled time—often unannounced—the broker changes the leverage on open positions to 1:100 or less.

Suddenly:

• Your required margin increases 5–10x
• Your free margin disappears
• Your open trades are in danger of stop-out

3. Forced Liquidation or Margin Call

If your account doesn’t meet the new margin requirements:

• Trades are auto-closed
• You receive a margin call or get stopped out
• Or the account balance turns negative

The broker may blame overnight market risk or volatility protection, but the goal is often to trigger losses or prevent profitable positions from staying open.

Why Brokers Use Overnight Leverage Resets

• To manage risk on their own books (especially B-book brokers)
• To trap traders who don’t monitor rollover conditions
• To clear out profitable swing trades before news events
• To reduce exposure while keeping client funds locked in
• To manufacture losses that benefit the broker

Red Flags of Overnight Leverage Resets

• No clear leverage policy in the broker’s terms
• Changes applied with little or no warning
• Support says “this is standard practice” but provides no documentation
• It always seems to happen before news events or weekends
• You’re unable to re-open the same trade in the morning without a much larger margin

Real Consequences for Traders

• Unexpected margin calls during non-trading hours
• Stopped-out positions that were otherwise profitable
• Loss of swing or carry trade strategies
• Psychological stress from being blindsided
• Frustration and mistrust of the trading platform

How to Protect Yourself

1. Read the Leverage Policy Carefully

Look for:

• Specific times when leverage changes
• Conditions under which resets apply
• Instruments or account types affected

If none of this is disclosed—avoid the broker.

2. Choose Regulated Brokers Only

Licensed brokers under FCA, ASIC, or CySEC are required to:

• Notify clients of leverage changes
• Keep margin policies transparent
• Apply consistent treatment across accounts

Unregulated brokers can change leverage arbitrarily.

3. Use Realistic Leverage

Avoid maxing out your account with 1:500 leverage. Use only what’s needed to execute your strategy conservatively. This provides a buffer in case leverage is reduced overnight.

4. Monitor Rollover Schedules

If your broker:

• Resets leverage on Fridays
• Implements weekend adjustments
• Changes leverage during holidays

—you must be prepared or flatten positions accordingly.

5. Document and Challenge Any Unfair Action

If your trade is stopped out due to a hidden leverage reset:

• Take screenshots of margin levels
• Save chat logs and emails
• File a complaint or begin a chargeback process

Master Broker Policies Before Trading

Understanding how leverage resets affect your trades is part of professional risk management. Traders MBA offers trading courses that teach you how to read broker fine print, manage margin safely, and protect your capital from backend manipulation.

Conclusion

The overnight leverage reset is a silent assassin. It strikes when markets are closed and traders are unaware, turning well-planned trades into margin errors. Real brokers offer consistency—scam brokers change the rules after the trade. Because in trading, your leverage should adjust with your risk—not against it.