Leverage is a Double Edge Sword! Leverage can assist in making a trade very profitable or make a huge loss if it goes another way. So what is leverage? Essentially, you are borrowing money to magnify your trade. So if you are right, your gains will be magnified. If the trade goes the other way, your losses will be magnified as well. Let's say you have a leverage of 50x from your broker, you are controlling $100,000 worth of assets with only $2,000 capital. Sounds pretty good right? Only if you are right! A 2% increase on $100,000 will result in $2,000 profits. That would be a 100% increase on your initial capital. On the other hand, a 2% drop of $100,000 will result in a $2,000 loss. This means your initial capital of $2,000 will be lost and you would need to start with a new account. If you lose more than ......