Leverage is a tool that allows you to trade with amounts much larger than your actual capital by "borrowing" money from the platform. It is a double-edged sword; it can massively amplify your profits, but it can also lead to the loss of your entire capital in a matter of seconds.

Here is a simplified explanation of how it works and its risks:

1. How does leverage work?

When you use a leverage of 1:10 (or 10x), it means that every 100 dollars you own gives you a purchasing power of 1000 dollars.

• Example in case of profit:

• Your capital: 100 dollars.

• Leverage: 10x (purchasing power 1000 dollars).

• If the currency price increases by 5%:

• Without leverage: Your profit is 5 dollars.

• With 10x leverage: Your profit is 50 dollars (50% of your actual capital).

2. The risk of "liquidation"

This is the most important term. Liquidation means that the platform automatically closes your position and seizes your capital (margin) because the loss has reached a level not covered by your deposited funds.

• Example in case of loss (10x):

• If the market moves against you by only 10%, you will lose 100% of your capital (because 10 \times 10\% = 100\%).

• Example in case of loss (50x):

• If the market moves against you by only 2%, your account is immediately liquidated and you lose everything.

3. Terms related to leverage

• Margin: is the actual amount you put from your pocket to open the position.

• Buying Power: Total amount (your capital + loan from the platform).

• Liquidation Price: the price that if the market reaches, it will trigger liquidation.