Leverage in Futures Trading: Why Beginners Should Be Careful
Leverage is one of the most powerful features of futures trading, but it is also the main reason why many beginners lose money.
In simple terms, leverage allows you to control a larger position with a smaller amount of capital. For example, with 10x leverage, a $10 move becomes a $100 position. While this can increase profits, it can also amplify losses just as fast.
High leverage leaves very little room for price fluctuation. Even a small market move against your position can lead to liquidation. This is why experienced traders often use low leverage and focus more on risk control than quick gains.
For beginners, the goal should be survival and learning—not maximum profit. Using low leverage, setting stop-loss orders, and trading with small amounts can help reduce unnecessary risk.
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