Leverage is often portrayed as a high-risk feature that should be left to hedge funds, banks, and seasoned traders. Many argue that “only professionals should use leverage,” suggesting that retail traders have no business touching it. While the caution is understandable — leverage amplifies both gains and losses — saying that only professionals should use leverage is an oversimplification. In reality, leverage is a neutral tool. The issue isn’t who uses it — it’s how well they understand and manage it.

This article explores why leverage is not just for professionals, how retail traders can use it responsibly, and what separates dangerous misuse from disciplined application.

Why leverage is considered a professional tool

1. Leverage increases risk exposure:
If you use 1:100 leverage, a 1% move against you can wipe out your entire position. Professionals typically have experience managing this type of risk — new traders often do not.

2. Institutional traders use advanced tools:
Professionals use leverage alongside risk models, automation, and deep market knowledge. This gives them an edge in managing leveraged exposure.

3. Retail misuse is common:
Most retail traders overleverage, risking too much on a single trade in hopes of quick profits. This leads to blown accounts and creates the perception that leverage is inherently dangerous.

4. High leverage is marketed recklessly:
Some offshore brokers target inexperienced traders with slogans like “control $100,000 with $100!” This aggressive promotion often results in poor trading decisions and reinforces the myth that leverage = gambling.

Why leverage is not just for professionals

1. It’s necessary for low-capital traders:
Without leverage, a retail trader with £1,000 can’t meaningfully trade forex, indices, or commodities. Leverage provides access to global markets — but must be used with caution.

2. Regulation allows it — with limits:
Most major regulators (FCA, ASIC, CySEC) allow retail clients to use moderate leverage (e.g., 1:30 for forex, 1:5 for stocks). These limits exist to provide access, not exclusion.

3. Retail traders can use low leverage responsibly:
A beginner using 1:10 or even 1:30 leverage — with tight risk management and position sizing — is not taking on reckless risk. In fact, many experienced traders only use a fraction of available leverage.

4. Education closes the gap:
With the right training, a retail trader can learn to use leverage as safely as a professional. The difference lies in understanding position sizing, margin, and drawdown control — not job title.

How non-professionals can use leverage wisely

1. Know your risk per trade:
Never risk more than 1–2% of your account on a single position — regardless of how much leverage you use.

2. Focus on position sizing, not just lot size:
Use calculators to determine lot size based on stop loss distance and desired risk — not on how much leverage you could use.

3. Use stop losses religiously:
Stop losses prevent large drawdowns when using leverage. Trading without one is gambling, no matter your experience level.

4. Avoid using full available leverage:
Just because your broker offers 1:500 leverage doesn’t mean you should use it. Most professional traders don’t even come close to maxing out leverage.

5. Respect margin and capital preservation:
Monitor your margin level. Don’t allow trades to consume too much margin — leave buffer room to avoid forced liquidation.

When leverage becomes dangerous

Leverage is risky when:

• Used without understanding risk exposure
• Traders chase revenge trades after losses
• Full account equity is used to “go big”
• No stop losses are in place
• Trades are opened based on emotion, not setup quality

These behaviours are not exclusive to amateurs — but they are more common among them due to lack of education and discipline.

Conclusion

It’s a myth that only professionals should use leverage. Leverage isn’t the problem — misusing it is. With proper education, structure, and risk control, even new traders can use leverage effectively. It’s a tool that can empower or destroy — depending on how you handle it. Rather than avoiding leverage entirely, learn to respect it, control it, and integrate it into a solid trading plan.

To master the use of leverage with confidence and precision, enrol in our Trading Courses at Traders MBA — where we teach you how to trade smart, not just big.