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EUR/USD 1.12160 ▲ +0.39%
GBP/USD 1.34194 ▲ +0.15%
USD/JPY 157.900 ▲ +0.41%
XAU/USD 3949.78 ▲ +1.37%
USD/CHF 0.81963 ▼ 0.40%
AUD/USD 0.70082 ▼ 0.23%
USD/CAD 1.39740 ▲ +0.04%
EUR/GBP 0.83581 ▲ +0.24%
ESC

Risk & capital

What is Leverage?

A mechanism that allows you to control a larger position with a smaller amount of capital.

Definition of Leverage

A mechanism that allows you to control a larger position with a smaller amount of capital. Expressed as a ratio (e.g., 1:100 means $1,000 controls $100,000). Leverage amplifies both profits and losses.

At a glance

Term
Leverage
URL slug
leverage
Category
Risk & capital
Short answer
A mechanism that allows you to control a larger position with a smaller amount of capital.
Deep dives
/guide/what-is-leverage/, /guide/what-is-margin/, /blog/how-to-trade-with-leverage-step-by-step/

Example

Example: $1,000 equity and 1% risk = a $10 cash cap. Size from “Leverage” and stop distance, not from a gut-feel lot size.

Common mistake

Common mistake: confusing “Leverage” with advertised max leverage — leverage alone does not set risk per trade.

Professional tip

Tip: write a cash daily loss limit independent of “Leverage”, then let the definition set size only inside that ceiling.

Related deep dives

FAQ

A mechanism that allows you to control a larger position with a smaller amount of capital.

“Leverage” sits inside capital protection. Ignoring it turns leverage and margin from tools into a path to rapid loss.

Common mistake: confusing “Leverage” with advertised max leverage — leverage alone does not set risk per trade.