🚫 A #Word of Caution on #Leverage : Understand the Real Impact Before You Trade
Many #traders believe higher leverage leads to higher profits—but that’s not always the case. Recently, I ran a personal test using the same capital across two separate accounts: one with 1.5x leverage, and the other with 15x leverage. I opened identical trades and closed both at the same price movement. Surprisingly, the PNL (Profit and Loss) results were nearly identical in both accounts.
This #highlights a critical misconception: leverage does not increase your percentage gain—it only magnifies your position size relative to your margin. If your initial investment remains the same, your profit (or loss) from the same price swing will not magically multiply just because you're using higher leverage. In fact, using extreme leverage increases your risk of liquidation, especially in volatile markets, where even a small reversal can wipe out your position entirely.
🔍 Leverage can be a useful tool when used correctly with proper risk management. But if misunderstood or misused, it can lead to faster losses rather than greater gains. Always trade with awareness, manage your risk, and never assume leverage is a shortcut to higher profits—it’s not.
