European retail restrictions on contracts for difference: tiered leverage caps by asset class, 50% margin close-out, negative balance protection, no bonuses and a standard risk warning.
The caps run from 30:1 on major currency pairs down through 20:1 on non-major pairs, gold and major indices, 10:1 on other commodities, 5:1 on single equities and 2:1 on crypto. National regulators including the fca adopted equivalent or stricter rules permanently.
Supporting measures matter as much as the caps. A margin close-out rule forces liquidation when equity falls to half the required margin, negative-balance-protection caps losses at account equity, monetary inducements are banned, and firms must display the percentage of retail accounts losing money.
Professional clients under client-categorisation can opt out of these protections, which is why offshore and professional-status routes are heavily marketed to experienced retail traders.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.
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