So what's leverage then??

Trading leverage refers to the use of borrowed funds to increase the potential return on investment. In the context of financial markets, leverage allows traders to increase the size of their positions in the market without having to put up the full amount of capital required to do so.

For example, if a trader wants to buy $10,000 worth of a particular asset but only has $1,000 of their own capital to invest, they could use leverage to increase the size of their position. If the leverage ratio is 10:1, the trader could borrow the remaining $9,000 from their broker to complete the transaction.

Leverage can magnify both profits and losses. If the trader's position turns out to be profitable, the returns will be greater than if the trader had invested only their own capital. However, if the trader's position turns out to be unprofitable, the losses will be greater than if the trader had invested only their own capital.

The use of leverage is common in many financial markets, including the stock market, commodities market, and forex market. However, it is important to note that leverage involves a higher level of risk and should be approached with caution. Traders must be careful not to overextend themselves and to use leverage only when they have a solid understanding of the market and a sound trading strategy. Proper risk management is also crucial when trading with leverage.

In conclusion, trading leverage refers to the use of borrowed funds to increase the potential return on investment. While leverage can magnify profits, it also involves a higher level of risk and should be approached with caution. Traders must have a solid understanding of the market, a sound trading strategy, and proper risk management in order to use leverage effectively.