Leverage

Leverage allows a trader to control a position whose notional size is many times their account equity. At 1:500 leverage, $1,000 of margin can control a position worth $500,000. Leverage amplifies both profits and losses proportionally. Higher leverage means smaller market moves can wipe out margin and trigger a margin call. Regulators in different jurisdictions cap retail leverage at different ceilings — typically 1:30 to 1:500.