Prop firm leverage is the ratio between the position size a trader can open and the equity in their funded account. A firm offering 1:100 leverage on a $100,000 account allows the trader to open positions worth up to $10,000,000 in notional value at a given time. Leverage in prop trading is typically lower than what retail brokers offer, and firms use it as one of several tools to manage risk on the accounts they fund.

Leverage varies significantly by asset class and by firm. Forex accounts commonly offer 1:100 leverage, sometimes higher on major pairs and lower on minors and exotics. Equities and cryptocurrencies are usually more conservative, with 1:5 to 1:20 leverage depending on the specific instrument. Firms publish the leverage schedule for each asset class in their plan documentation, and the schedule can differ between the challenge and funded stages.

Leverage does not change the account’s risk rules, but it does change how quickly a trader can approach them. Higher leverage means larger position sizes are possible at the same account balance, which allows larger gains but also larger losses in shorter timeframes.