📈 Does Leverage Magnify Profits or Risks? A Critical Look! 📉

Leverage doesn't just amplify profits; it equally magnifies fear. Using high leverage, such as 50x or 100x, means even minor market fluctuations can feel catastrophic, leading to immense stress. If you don't fully understand its implications, avoid high leverage.

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When your position size is excessively large due to high leverage, your focus shifts from market structure to merely staring at the liquidation price. A mere 1% market noise can quickly escalate into a disaster. This intense fear of liquidation often paralyzes rational decision-making.

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Furthermore, high leverage typically necessitates the use of very tight Stop Losses (SL). This often results in being prematurely stopped out by a bottom wick, right before a potential market reversal or significant move. Protect your capital and trade wisely.