What Is Leverage?
In the context of trading, leverage represents the extent to which a trader’s position and potential profitability are amplified through the borrowed funds.
Leverage can also refer to the amount of debt a company borrows to finance its assets.
Investors utilize leverage to increase their buying power in the market.
Amplifying Gains and Losses
Margin trading carries significant risk as it can magnify both profits and losses.
Shorting is used when a trader expects prices to fall, while going long is a strategy applied when the price of a cryptocurrency is anticipated to rise.
Some countries have implemented regulations to restrict margin trading due to concerns about potential substantial losses among inexperienced investors.