The concept
lets a small deposit control a larger position. At 20:1, $1,000 controls $20,000 of exposure.
Why it matters
A 5% move against a 20:1 position erases 100% of the deposit.
How markets interpret it
Regulators in many countries cap retail leverage on gold because losses can be severe.
Key takeaways
- Leverage magnifies both gains and losses.
- High leverage can wipe out an account quickly.
Knowledge check
At 10:1 leverage, a 10% adverse move loses about…
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