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Glossary · investing

What is Leverage?

The use of borrowed money to amplify potential returns — and losses.

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Leverage magnifies both gains and losses. A 2× leveraged position that moves 10% against you loses 20% of equity. Forced liquidations are the recurring danger.

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Frequently asked questions

What is a good leverage ratio?

For long-term equity investors, generally zero to modest. Higher leverage is for professionals with strict risk controls.

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