Definition
Leverage is the use of borrowed funds to increase the size of a trading position. It is commonly expressed as a ratio such as 2x, 5x, or 10x. For example, with 10x leverage, a trader can control a ₹10,00,000 position using only ₹1,00,000 of their own capital. While leverage can magnify profits, it can also magnify losses. Because of this, leverage should be used carefully and alongside proper risk management strategies.
Simple Explanation
Leverage lets traders control larger positions using a smaller amount of money.
Example
A trader uses 5x leverage to increase exposure to Ethereum price movements.
Why It Matters
Leverage increases both profit potential and risk in trading.
Frequently Asked Questions
What is leverage?
It is borrowed capital used to increase trading exposure.
Can leverage increase losses?
Yes, losses are amplified just like profits.
What does 10x leverage mean?
It means controlling a position ten times larger than your capital.