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🔹 What Is Leverage?
Leverage means borrowing money from your broker to control a bigger trade than your own money allows.
👉 It’s like using a small key to open a very big door.
Your money is the key. Leverage gives it power.
🔹 How Leverage Is Written
Leverage is written like this: 1:10, 1:100, 1:500, etc. This means:
Leverage Your Money Trade You Control
1:10 $10 $100
1:100 $10 $1,000
1:500 $10 $5,000
The second number is the multiplier (power).
🔹 Easy Trading Example
You deposit $100. Your broker gives 1:100 leverage. You can now trade:
> $100 × 100 = $10,000
⚠️ Important: That $10,000 is not yours — it is mostly borrowed money.
🔹 Why Traders Like Leverage
Because profits grow faster. If price moves 1% with 1:100 leverage
1% of $10,000 = $100 profit
Without leverage: 1% of $100 = $1 profit. Same market move. Much bigger result.
🔹 The Dangerous Side ⚠️
Leverage is a double-edged sword. Losses also multiply. If price moves against you by 1%, you lose $100.
Your entire $100 account can be wiped out. That’s why many beginners blow accounts in minutes using high leverage.
🔹 Margin (Very Important)
Margin = the money the broker locks to keep your trade open. If losses grow and your money is not enough: (Follow to get more updates on Margins)
➡ Margin Call
➡ Stop Out
➡ Trade closes automatically
👉 You can lose everything very fast.
🔹 Safe vs Risky Leverage
Leverage Risk Level
1:10 – 1:50 Safer (good for beginners)
1:100 Medium risk
1:500+ Very risky / account killer
🔹 Simple Way to Remember
Leverage is like: Driving a car with a turbo engine You reach profit faster… But you can crash faster too.
🔹 Golden Rule 🏆
Professional traders survive because they:
✔ Use small lot sizes
✔ Always use stop loss
✔ Risk only 1–2% per trade
✔ Respect leverage
🔹 Final One-Line Summary
Leverage in trading is borrowed power that increases both profit and loss — use it carefully, or it will destroy your account.
Follow for more Part Two: Realistic examples in trade and Liquidation. Comment and Share...