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Leverage
Leverage allows a trader to control a larger market position using a smaller amount of capital as margin. For example, $1,000 of margin supporting a $5,000 position represents approximately 5× leverage on that capital.
Why it matters to you
Leverage magnifies exposure, which means market movements produce larger gains or losses relative to the capital committed. It does not improve the quality of a trade. Using more leverage also generally leaves less room for adverse price movement before margin requirements become a problem.
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