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Why Brokers Reduce Leverage During News Events (And Why It Protects You)
EMAR Blog

Why Brokers Reduce Leverage During News Events (And Why It Protects You)

Ever wondered why leverage drops during major news events? Learn how this move protects traders from excessive losses and promotes smarter risk management.

Why Brokers Reduce Leverage During News Events – And Why It’s Good for You

In the world of forex and CFD trading, leverage can be a trader’s best friend—or worst enemy. While it allows you to control large positions with small capital, it also increases risk dramatically.

During major economic news events, many brokers (including EMAR Markets) temporarily reduce leverage. At first, this might seem like a restriction—but in reality, it's a crucial risk management tool that protects traders from severe losses.

Let’s explore why this move is necessary—and how it actually benefits you.


1. Major News = Massive Volatility

Economic events like:

  • Non-Farm Payroll (NFP)

  • Federal Reserve rate decisions

  • Inflation (CPI) or unemployment data

  • Central bank speeches

...often cause sharp, unpredictable price movements—sometimes hundreds of pips within seconds.

These sudden spikes can:

  • Cause slippage

  • Blow through stop-losses

  • Trigger large losses when using high leverage

Reducing leverage before these events hit gives traders better control.


2. Reducing Leverage = Reducing Risk

When a broker temporarily lowers leverage (e.g., from 1:1000 to 1:200), it forces traders to:

  • Trade with smaller position sizes

  • Keep losses within safer limits

  • Avoid margin calls due to overexposure

At EMAR Markets, this approach is part of our commitment to trader protection—because long-term success starts with capital preservation.


3. Preventing Account Wipeouts & Negative Balances

During high-impact news, the market can gap or move so fast that even stop-losses can't trigger at the expected price.

This puts traders at risk of:

  • Account wipeouts

  • Negative balance situations

  • Chain margin calls

By lowering leverage, brokers minimize these risks. EMAR Markets also provides negative balance protection, so you’ll never owe more than your deposit.


4. Promoting Responsible Trading Behavior

High leverage can be tempting, but it often leads to impulsive decisions.

When leverage is reduced:

  • Traders must think before entering a trade

  • More emphasis is placed on strategy over luck

  • Risk-to-reward ratios become more realistic

This leads to better discipline, especially for new traders learning how markets react to major news.


5. A Sign of a Transparent, Client-Focused Broker

Let’s face it—brokers who allow full leverage during NFP or FOMC might not have your best interest at heart.

At EMAR Markets, we reduce leverage during these events not to limit your opportunity—but to protect your future as a trader. We want our clients to trade longer, smarter, and safer.


Pro Tips: How to Prepare for News Trading

  • Always check the economic calendar

  • Avoid entering large trades just before high-impact events

  • Use pending orders or wait for price stabilization

  • Focus on risk management first, reward second


Conclusion

Reducing leverage during news isn't a weakness—it's a wise risk management move. Brokers like EMAR Markets implement this policy to protect you from excessive losses and give you a more stable trading experience.

In trading, survival comes before success—and managing risk is your greatest edge.


Ready to Start Trading?

Open your CFD account with EMAR Markets now and gain access to the global markets in just a few clicks.

Zayed Imran

EMAR Markets Expert

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