How Leverage Works When Trading Futures on Plus500 (LON:PLUSP)
Working out how much market exposure a given deposit actually controls is one of the most useful calculations a trader can do before placing a futures order. Leverage in futures trading is not a setting you select: it arises from the structure of the contract itself, because a contract’s notional value is far larger than the margin required to hold it. Futures trading involves the risk of loss and is not suitable for every investor. This guide explains how margin and contract multipliers combine to create leverage, what the published day trading margins mean, and why position sizing matters more once leverage is involved.
TL;DR
- Leverage in futures comes from the gap between a contract’s notional value and its margin requirement.
- Each contract has a fixed multiplier that determines the dollar value of every price tick.
- Day trading margin is the initial amount of money needed to open a futures order position.
- Micro contracts carry smaller multipliers and smaller margins, which allows finer position sizing.
- Leverage magnifies potential gains and potential losses in equal measure.
Trading with leverage comes with a high risk and may not be suitable for everyone
Where Does Leverage Come From in a Futures Contract?
Leverage arises from contract structure rather than from a borrowing decision. A futures contract represents a defined quantity of an underlying asset, and its notional value is the contract multiplier times the current price.
Because the margin required to hold that contract is a small fraction of its notional value, the position controls far more exposure than the cash committed. That relationship is what magnifies both potential gains and potential losses.
How Do Contract Multipliers Translate Price Moves Into Dollars?
The multiplier is the bridge between an index or commodity price and your account. It is fixed by the exchange for each contract.
|
Contract (Exchange Specification) |
Multiplier |
Minimum Tick and Tick Value |
|
E-mini S&P 500 |
$50 x index |
0.25 index points = $12.50 |
|
Micro E-mini S&P 500 |
$5 x index |
0.25 index points = $1.25 |
|
E-mini Nasdaq-100 |
$20 x index |
0.25 index points = $5.00 |
|
Micro E-mini Nasdaq-100 |
$2 x index |
0.25 index points = $0.50 |
|
Crude Oil |
1,000 barrels |
$0.01 = $10.00 |
|
Micro WTI Crude Oil |
100 barrels |
$0.01 = $1.00 |
Figures above are CME Group (NASDAQ:CME) contract specifications. A ten-point move in the S&P 500 therefore represents $500 on one E-mini contract and $50 on one Micro E-mini contract, in whichever direction the move occurs.
What Do the Published Day Trading Margins Mean?
Plus500 publishes day trading margins, described as the initial amount of money needed to open a futures order position. They differ widely by contract and by contract size.
|
Contract |
Published Day Trading Margin |
|
Micro E-mini S&P 500 |
$50 |
|
E-mini S&P 500 |
$500 |
|
Micro E-mini Nasdaq-100 |
$100 |
|
Micro Gold |
$125 |
|
Gold |
$1,250 |
|
Micro Bitcoin |
$80 |
Margin rates may not be reflected in real time. Please visit the platform for current rates. Margin is capital committed against the position, not a fee, and it is distinct from the commission charged per side.
How Does Leverage Affect Outcomes in Both Directions?
The symmetry is the point that matters most. Leverage can increase exposure to price movements, which increases both potential gains and potential losses.
Consider one Micro E-mini S&P 500 contract with a $5 multiplier. A 20-point move in the index represents $100 on that position. If the move favors your direction, the gain is amplified relative to the margin committed. If it goes against you, the loss is amplified by exactly the same factor.
This is why a futures outcome is best understood as realizing either a profit or a loss based on the difference between your entry and exit prices, with the contract multiplier and position size determining the scale of whichever occurs.
Trading with leverage comes with a high risk and may not be suitable for everyone
Why Does Position Sizing Matter More With Leverage?
Position size is the single variable a trader fully controls, and with leverage it determines how much a given price move affects the account.
Micro contracts exist precisely to make sizing more granular. Because a Micro E-mini contract is one tenth the size of the corresponding E-mini, a trader can scale exposure in smaller steps rather than jumping between large increments. That granularity does not reduce the risk of the market moving against you; it changes how much of that move lands on the account.
What Else Should Be Understood Before Using Leverage?
Several practical considerations apply once a leveraged position is open.
- Margin requirements can change with market conditions and differ by contract and contract month.
- Positions may be liquidated if margin requirements are not met, and a liquidation fee of $10 per contract applies.
- Commissions of $0.89 per side on standard contracts and $0.49 per side on micro contracts apply, plus an NFA fee of $0.02 per side per contract and exchange fees as applicable. Additional fees may apply, as set out on the Fees & Charges page.
- Contracts expire, so a position must be closed or rolled into a later contract month.
- Markets can gap, so a stop-loss order may execute at the next available price.
Demo mode, with unlimited virtual funds and real-time quotes, allows margin behavior and position sizing to be observed without risking real money. Account eligibility depends on residency, verification and other requirements.
Why Consider Plus500 for Futures Trading?
- Futures and Prediction Markets in one platform
- Transparent fees
- Regulated by the CFTC and NFA
- Unlimited demo mode
- Micro and standard contracts across multiple asset classes
- A free trading academy (Educational resources and news)
- Built-in risk management features, including stop-loss orders
Key Takeaways
- Leverage in futures comes from contract structure, not from a borrowing choice.
- The contract multiplier converts each price tick into a fixed dollar amount.
- Published day trading margins range from $50 on the Micro E-mini S&P 500 to $1,250 on Gold, and can change.
- Micro contracts are one tenth the size of E-minis, allowing finer sizing.
- Gains and losses are magnified equally, which makes sizing and exits central.
Trading with leverage comes with a high risk and may not be suitable for everyone
FAQs
Is Futures Leverage the Same as Borrowing Money?
Not exactly. Leverage in futures results from the contract’s notional value being much larger than the margin required to hold it, rather than from an explicit loan.
What Is Day Trading Margin?
It is the initial amount of money needed to open a futures order position. Rates differ by contract and may not be reflected in real time, so the platform shows current figures.
Does a Larger Multiplier Mean More Risk?
A larger multiplier means each tick is worth more in dollars, so the same price move has a bigger effect on the account in both directions.
What Happens If My Margin Is Insufficient?
Positions may be liquidated if margin requirements are not met, and a liquidation fee of $10 per contract applies.
How Can I See the Effect of Leverage Without Risking Money?
Demo mode provides unlimited virtual funds and real-time quotes in the same environment as a live account, so margin and tick values can be observed directly.
