Leverage
Leverage allows a trader to control a position larger than their deposited capital, expressed as a ratio such as 30:1 — magnifying both gains and losses proportionally.
At 30:1, $1,000 of margin controls $30,000 of exposure. A 1% adverse move against that exposure is a $300 loss — 30% of the deposited capital.
Leverage is frequently misunderstood as the source of risk. It is more accurately an enabler of it: what determines risk is position size relative to account, and leverage simply removes the capital constraint that would otherwise prevent an oversized position. A trader sizing correctly is largely unaffected by available leverage.
Regulators cap retail leverage in many jurisdictions specifically because higher available leverage correlates with faster account losses. The cap is a constraint on size, which is the actual variable.
Related terms
Maintained by Jared Sinclair, Founder · Syrax Global FZCO · Definitions are educational, not financial advice.
Knowing the vocabulary is the easy part.
Every term here can be learned in an afternoon. Applying them consistently under pressure is the part that decides outcomes — and the part we measure.