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Leverage

Using borrowed money or derivatives to control a larger position than your cash allows.

Orders & TradingBeginner

Definition

Leverage magnifies results in both directions. A 2x leveraged position gains twice as much when the price rises and loses twice as much when it falls. Margin loans, options, futures and leveraged ETFs all provide leverage in different ways.

Watch out for

Losses can exceed your starting capital with margin and some derivatives. Leveraged ETFs reset daily and can drift away from the multiple you expect over longer periods.

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