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Dunn To PerfectionFoundation

Risk Management · Module 2: Leverage, Margin & Exits · Lesson 1

Leverage

Beginner 6 minLesson 5 of 15

Learning objectives

  • Explain leverage in plain language
  • Understand why it matters to markets
  • Recognise a common misconception

The concept

Borrowed exposure that magnifies both gains and losses.

Why it matters

is the most common reason beginners lose accounts quickly.

How markets interpret it

Effective leverage = total exposure ÷ account equity.

Key takeaways

  • Measure effective leverage.
  • Lower is safer.

Knowledge check

$50,000 exposure on a $5,000 account is effective leverage of…

Key terms · hover or tap for a definition

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