What's your relationship with leverage now?
Beginners use all the leverage they're offered; experienced traders use what the position needs. The shift is one of the clearest markers of growth, and everyone has a story about the turning point.
Share yours:
- the leverage you started with
- the event that changed your view
- the effective leverage you actually use now
The leverage guide explains why offered leverage and used leverage are different numbers.
Background: Leverage and margin explained: margin calls, stop-outs and how losses grow
Leverage lets you control a large position with a small deposit. It magnifies losses exactly as much as gains, and it is behind most blown trading accounts.
What does 30:1 leverage mean?
You can control a position 30 times larger than your margin deposit. $1,000 of margin opens a $30,000 position, and gains and losses are calculated on the full $30,000.
What is a margin call?
A warning from your broker that losses have reduced your margin level to a set threshold. If it keeps falling, the broker starts closing positions automatically, which is called a stop-out.
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