Leverage: how it works and why it multiplies losses too

Leverage is a multiplier that lets you open a position worth more than the margin you put in: position value = margin × leverage. For example, with 10× leverage, a margin of 100 units opens a position worth 1000 units. The platform finances the missing part and charges fees or interest in return.

Leverage does not create an edge; it only scales the result in both directions. A price move of a few percent can wipe out a significant part of the margin, and at higher multipliers, the position will be liquidated on a small move. That is why position size and stop loss are calculated from the loss you accept, not from the maximum leverage the platform offers. High leverage is a common reason for beginners' quick losses.