Leverage & margin
Leverage: borrowing buying power
Your broker lets you control a much bigger trade than the money you put in. With 1:100 leverage, $1,000 controls $100,000 (one standard lot). It sounds great, but it works both ways: losses grow exactly as fast as gains.
Margin: the deposit for your trade
Margin is the part of your money the broker holds while a trade is open: position size ÷ leverage. If losses eat into your account until it can't cover that deposit, you get a margin call (a warning), and then a stop out: the broker closes your trades for you.
Size sets the risk, not leverage
High leverage doesn't force you to trade big. How much you can lose depends on your position size and where your stop is. Good traders use leverage to keep cash free, not to bet bigger.
Remember: Margin = position size ÷ leverage.
Test yourself
With 1:100 leverage, $1,000 of margin controls…
$100,000$1,000 × 100 = $100,000.
What does leverage do to losses?
Magnifies them as much as gainsLeverage is symmetric: bigger exposure both ways.
A margin call means…
Your account can barely cover the margin of open tradesIf it gets worse, trades get closed automatically (stop out).
What should set how much you can lose on a trade?
Your position size and stop distanceLeverage only decides how much margin is set aside.
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Candlr is educational. Nothing here is financial advice, and trading involves a high risk of loss.