What is leverage in trading?

leverage is more or less a position size multiplier the trader borrows funds in order to increase their position size to an higher amount this allows a trader to open positions that are significantly larger than what his capital would otherwise allow however, the use of leverage amplifies both your profits and losses for example let's say you have an account balance of 5 btc, and you want to place an order with 10 1 leverage the result is a new position worth 50 btc this means your profits and losses are magnified by a factor of 10 compared to the price action a 1% move in either direction of the pair you're trading represents a 10% move on your initial capital of 5 btc leverage trading is risky, especially in times of high volatility in the markets it’s not suited for beginners and concepts such as maintenance margin and liquidation should be studied before starting in leveraged trading