{"id":1000170,"date":"2026-06-17T08:06:41","date_gmt":"2026-06-17T08:06:41","guid":{"rendered":"https:\/\/dev.themarketperiodical.com\/glossary\/leverage\/"},"modified":"2026-06-17T08:06:41","modified_gmt":"2026-06-17T08:06:41","slug":"leverage","status":"publish","type":"glossary","link":"https:\/\/themarketperiodical.com\/th\/glossary\/leverage\/","title":{"rendered":"Leverage"},"content":{"rendered":"<p><strong>Leverage<\/strong> allows a trader to control a position larger than their deposited capital by borrowing the difference from a broker or exchange. It is expressed as a ratio \u2014 for example, 10:1 leverage means that for every $1 of the trader&#8217;s own funds, they can control $10 worth of a position.<\/p>\n<p>How leverage works in practice:<\/p>\n<ul>\n<li>A trader deposits $1,000 as margin and uses 10:1 leverage to open a $10,000 position.<\/li>\n<li>If the asset rises 5%, the position gains $500 \u2014 a 50% return on the $1,000 deposited.<\/li>\n<li>If the asset falls 5%, the position loses $500 \u2014 a 50% loss on the deposited capital.<\/li>\n<li>If the asset falls 10%, the position loses $1,000 \u2014 wiping out the entire margin deposit, triggering a <strong>liquidation<\/strong>.<\/li>\n<\/ul>\n<p>Liquidation occurs when losses reduce the margin balance below the exchange&#8217;s required minimum. At that point, the exchange automatically closes the position to prevent the loss from exceeding the deposited funds.<\/p>\n<p>Leverage is common in:<\/p>\n<ul>\n<li>Forex trading, where brokers often offer high leverage ratios<\/li>\n<li>Cryptocurrency derivatives markets (futures and perpetual contracts)<\/li>\n<li>Traditional futures and options markets<\/li>\n<\/ul>\n<p>In crypto markets, some platforms have offered leverage ratios of 50:1, 100:1, or higher. Regulators in many jurisdictions have imposed caps on leverage available to retail traders due to the associated risk of rapid, total loss of deposited funds.<\/p>\n<p>Leverage amplifies volatility&#8217;s effect on a position. An asset that moves modestly in percentage terms can produce outsized gains or losses for a leveraged trader. Risk management \u2014 including position sizing and stop-loss orders \u2014 is particularly critical when using leverage.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Leverage allows a trader to control a position larger than their deposited capital by borrowing the difference from a broker or exchange. It is expressed as a ratio \u2014 for example, 10:1 leverage means that for every $1 of the trader&#8217;s own funds, they can control $10 worth of a position. How leverage works in \u2026<\/p>\n","protected":false},"template":"","meta":[],"class_list":["post-1000170","glossary","type-glossary","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/themarketperiodical.com\/th\/wp-json\/wp\/v2\/glossary\/1000170","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/themarketperiodical.com\/th\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/themarketperiodical.com\/th\/wp-json\/wp\/v2\/types\/glossary"}],"wp:attachment":[{"href":"https:\/\/themarketperiodical.com\/th\/wp-json\/wp\/v2\/media?parent=1000170"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}