Leverage lets a small deposit control a large position. It is the single most misunderstood tool in trading, powerful, and unforgiving when misused.
How leverage works
At 1:100 leverage, $1,000 of margin controls $100,000 of notional exposure. A 1% move is a 100% move on your margin, in either direction.
Margin and the stop-out
Used margin is locked while a position is open; free margin absorbs adverse moves. When equity falls below the maintenance level, positions are closed automatically to protect the account.
Using leverage responsibly
High leverage does not mean you must use it. Most professional traders use far less than the maximum available. Choose leverage that keeps your meaningful stop loss from triggering a margin call.
