Leverage is a buzzword in trading, but what does it actually mean? If you've ever wondered how traders can control huge positions with just a fraction of the capital, you’re in the right place! Let’s break it down in a way that makes sense and explore how you can use leverage wisely without getting burned.
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What Is leverage in trading?

Leverage is like a turbo boost for your trades-it allows you to control a large position with a much smaller investment. Think of it like putting a small deposit down on a house but gaining exposure to the entire property's value. Cool, right?

For example, with leverage of 1:100, you can control $1,000 worth of an asset with just $10 of your own funds. This magnifies both potential profits and losses, so it’s crucial to use it wisely.
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How does leverage work?

Let’s say you’re trading a stock priced at $100 and use leverage of 1:100:

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See the difference? While leverage can multiply gains, it can also amplify losses, making risk management crucial.
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Managing risk: Don’t let leverage run wild

Leverage can be powerful, but without a plan, it can lead to big losses. Here are some smart ways to manage your risk:

• Use Stop-loss orders - Automatically close a position if the price moves against you to prevent large losses. 
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• Set take-profit orders - Lock in profits by closing trades when they hit your target price.
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• Start small - Don’t go all-in with high leverage right away. Begin with lower leverage and increase gradually as you gain experience.
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• Diversify - Spread your trades across different assets to reduce risk.
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Where can you use leverage on Deriv?

Leverage isn’t available on all markets, but here’s where you can make the most of it on Deriv:
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