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Leverage

Use of borrowed capital to amplify potential returns and risks.

In depth

Leverage takes many forms: margin loans, options, futures, leveraged ETFs, mortgage on real estate. 2x leverage doubles both gains and losses. High leverage works until it doesn't — leveraged blow-ups (LTCM 1998, Archegos 2021) are recurring market features.

Frequently asked about Leverage

What is Leverage?

Use of borrowed capital to amplify potential returns and risks. Leverage takes many forms: margin loans, options, futures, leveraged ETFs, mortgage on real estate. 2x leverage doubles both gains and losses. High leverage works until it doesn't — leveraged blow-ups (LTCM 1998, Archegos 2021) are recurring market features.

Why does Leverage matter for investors?

In trading, Leverage is one of the building blocks investors use to compare opportunities and assess risk. Understanding it helps you read research notes, earnings reports, and market commentary without getting lost in jargon.

How is Leverage used in practice?

Leverage takes many forms: margin loans, options, futures, leveraged ETFs, mortgage on real estate. 2x leverage doubles both gains and losses.

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