Leverage and Margin Basics

Exposure is larger than investment

Leverage multiplies market exposure relative to the amount committed as margin. It can increase gains, but it also increases how quickly a loss reduces available equity.

Margin state

• Available margin changes with cash, reserved funds, exposure, and unrealized results.
• New trades can be blocked when post-trade margin would be insufficient.
• Warnings can appear before forced liquidation.
• Rapid movement can cross thresholds before a user can respond.

No control removes risk

Stop instructions, diversification, alerts, and position sizing can reduce avoidable exposure but cannot guarantee a maximum loss during gaps, outages, or illiquid markets.