Leverage
A mechanism that controls larger exposure with a smaller deposit (margin). It scales profits and losses proportionally — and it demands risk management.
Definition
Leverage lets you control larger market exposure with a smaller deposit (margin). It magnifies both the potential profit and the loss in PLN relative to the price move — it is not “free capital”.
Example
On forex, with 10,000 PLN of capital you open a 0.5 lot EUR/USD position. Thanks to leverage and margin, the broker requires only a fraction of the notional value as a deposit, but a move of a few dozen pips against you quickly eats a large part of the account — which is why you cap risk as a percentage per trade instead of using “the maximum leverage on the offer”.
Anti-example / common mistake
Leverage of 1:30 or 1:500 is not a strategy goal. A common mistake: confusing the maximum leverage from an advert with the position size that follows from a 1–2% risk rule and the distance to your stop-loss.