Borrowed capital that allows you to control a larger position than your account balance would normally permit.
Leverage is expressed as a ratio like 10:1, 50:1, or 100:1. At 100:1 leverage, $1,000 controls $100,000 in the market. Leverage amplifies both profits and losses proportionally. It does not change the probability of winning — it only magnifies the outcome.
Leverage is a double-edged sword. It allows traders to participate in markets with smaller accounts, but it also means losses are magnified. A 1% move against a 100:1 leveraged position wipes out the entire account. Proper use of leverage always pairs with strict position sizing and stop losses.
You have $5,000 and use 20:1 leverage, controlling a $100,000 position. A 0.5% move in your favor earns $500 (10% return). A 0.5% move against you loses $500. Without leverage, that same move would only be a $25 change.
$1,000 with 100:1 leverage controls $100,000. Profits and losses are both amplified 100x.