How does leverage impact risk and reward in financial trading?
- Submitted by 17 hours ago
James Miller
Answered 17 hours ago
Leverage in financial trading allows traders to control larger positions with a smaller amount of capital, increasing potential returns. When used wisely, leverage can amplify profits from small market movements, making it a powerful tool for skilled traders. However, it also increases risk, as losses are magnified the same way. Successful use of leverage requires strong risk management, discipline, and a clear understanding of market behavior.
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