Plain-English definitions, reviewed by an independent investor
Leverage
Leverage is using borrowed money or derivatives to control a larger position than your capital alone.
Leverage is using borrowed money or derivatives to control a larger position than your capital alone.
Exposure = Capital × Leverage Multiple
Why it matters
It multiplies outcomes, good and bad, from the same move.
Common confusion
It turns small adverse moves into large losses; survival depends on sizing.
Frequently Asked Questions
Leverage vs margin?
Margin is the loan; leverage is the resulting magnification of exposure.
Why use leverage?
It boosts returns on capital, but the same math drags on losses.