In trading and investing, one of the most powerful — and risky — tools is leverage. Simply put, leverage allows you to control larger positions in the market with a relatively small amount of capital.

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🔎 How It Works

Leverage is essentially a loan provided by your broker or exchange that increases the size of your position.

Example:

• You have $1,000 in your account.
• You use 1:10 leverage.
• This allows you to open a $10,000 trade.

If the asset’s price rises by 5%:

• Without leverage, you’d make $50.
• With 1:10 leverage, your profit jumps to $500.

👉 The catch: leverage amplifies both gains and losses.

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⚠️ The Risks

• If the price moves against you, your losses are multiplied.
• A sharp adverse move can trigger liquidation — your position is closed automatically, and you lose your margin.
• The higher the leverage, the smaller the “breathing room” for your trade.

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💡 Where Leverage Is Used

1. Stock market. Investors use margin accounts to buy more shares.
2. Forex. Currency markets often offer high leverage (1:50, 1:100 or more).
3. Crypto. Exchanges allow anywhere from 1:2 up to an extreme 1:100 leverage.

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📊 How to Use It Safely

• Choose the lowest leverage that fits your strategy.
• Always set stop-losses and pre-calculate your risk.
• Avoid high leverage during major news events or volatile periods.
• Think of leverage as a tool for capital efficiency — not a shortcut to getting rich quick.

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✅ Bottom Line

Leverage is like a turbocharger: it can accelerate your profits, but without control, you crash faster.

The golden rule: manage risk first, use leverage second.

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With experience and realism,
George Zimmerman
Your broker & market partner