Leverage

Leverage is the use of borrowed exposure to control a position larger than the capital committed to it. A leverage ratio of 20:1, for example, means £1 of account capital can support £20 of market exposure, subject to the broker’s requirements.

Leverage magnifies both profits and losses because price movements apply to the full position size, not only the margin deposited. Margin is the amount set aside to maintain the leveraged position. If losses reduce available funds, a margin call or automatic position closure may occur.

Example: With 20:1 leverage, £500 of required margin could support £10,000 of GBP/USD exposure; gains and losses are calculated on the £10,000 position.

Leverage increases exposure to price movements and can cause losses to accumulate rapidly relative to the capital deposited.

• Higher leverage increases both potential gains and potential losses.
• Margin requirements vary by broker, instrument and regulatory jurisdiction.
• Leveraged positions may be closed if account equity falls below required levels.

Educational guidance only — never a trading signal or recommendation.