What is Leverage?
Leverage allows trading amounts exceeding your deposit. 1:100 leverage means with $1000 in your account, you can control a $100,000 position.
Advantages of Leverage
- Ability to make high profits with small capital
- Flexibility in position management
Leverage Risks
- Losses also increase proportionally
- Risk of complete deposit loss (margin call)
- Emotional pressure with large position sizes
Risk Management Rules
- Risk no more than 1-2% of deposit per trade
- Always use stop-losses
- Don't increase position size during losses
- Keep a trading journal