Leverage lets a trader control a larger market exposure than the cash put down as margin. That can make small price moves have a large effect on account equity—both positively and negatively. Leverage does not make a trade more predictable.
Exposure is larger than the deposit
If a position is leveraged, the amount at risk can change quickly as the market moves. Margin requirements may rise, and a provider can close positions under its terms. In fast markets, a stop order may execute at a different price from the one requested. Protection rules differ by jurisdiction and product, so they should never be assumed.
Costs and operational risks
Spreads can widen, liquidity can thin, and execution can be delayed around news, market openings, holidays or abrupt price movements. Financing charges may apply to positions held overnight. Technology outages, account access and counterparty arrangements also matter.
A risk checklist
- Read the product disclosure and margin rules.
- Calculate the full position exposure and possible loss before entering.
- Understand that stop orders and risk controls may not prevent losses in every market condition.
- Do not trade with borrowed money or funds needed for essentials.
- Verify the provider’s legal name and permissions through the relevant regulator.
Any examples on this website are educational and are not individualized financial advice.
Reviewed October 21, 2026 · Full risk disclosure