Glossary

Leverage

The ability to open a position several times the size of your margin (e.g. 1:30, 1:100). It magnifies losses as much as profits.

At 1:100 leverage, $1,000 of margin controls a $100,000 position. Leverage doesn't create risk by itself; position size and stop distance determine risk. But high leverage is indirectly dangerous because it makes it easy to open an oversized position.

In regulated markets, leverage for retail investors is capped (1:30 on major pairs in the EU/UK). Prop firms generally offer between 1:30 and 1:100.

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