Leverage lets a trader open a position larger than their account balance by borrowing the difference from the broker, expressed as a ratio like 1:100 or 1:500. It multiplies both potential profit and potential loss on the same capital, which is why leverage itself isn't risk — undersized stop-losses and oversized position sizes relative to the account are.
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TRADING GLOSSARY
Leverage
Borrowed buying power that lets you control a larger position than your account balance alone.