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Risk

How Leverage and Margin Work

Leverage magnifies both gains and losses. Understand margin requirements before you trade.

Educational guide · 6 min read

Margin explained

Margin is the amount of capital required to open and maintain a leveraged position. It is not a fee, but a portion of your balance set aside as collateral.

Leverage explained

Leverage expresses the ratio between position size and required margin. Higher leverage means a smaller price move has a larger effect on your account.

Margin calls and stop-outs

If losses reduce your equity below required levels, you may receive a margin call and positions may be closed automatically.

Using leverage responsibly

Choosing a lower effective leverage, sizing positions conservatively and using stop-loss orders can help limit exposure, though none removes risk entirely.

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· Associated Press / BNN Bloomberg

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