In the trading world, leverage tempts you to achieve massive profits with a small capital. It may seem like you've found a shortcut to wealth, but the reality has a more perilous side. Leverage can be a useful tool for professionals, but in the hands of beginners, it can turn into a financial disaster.

Why is leverage considered dangerous?

1 Amplification of losses

Just as leverage multiplies profits, it also multiplies losses. A small movement against your position can lead to the complete liquidation of your account.

2 False sense of confidence

Leverage inflates the feeling of power, causing traders to open larger positions than they can handle, unaware that the market is unforgiving.

3 Destructive psychological impact

Significant losses resulting from leverage generate fear and hesitation, pushing the trader to make random decisions in the future.

4 Increased likelihood of a Margin Call

When using high leverage, the distance between your current balance and the liquidation threshold decreases, making you susceptible to automatic closure of your trades.

5 Makes learning costly

New traders need to make mistakes to learn, but with leverage, every mistake can cost you your entire account.

Summary

Using leverage is like driving a race car at breakneck speed; if you are not a professional, you are exposing yourself to inevitable financial wreckage. Start with low leverage, and focus on learning and discipline, not on quick profits.

Final advice: Don't let greed lead you — use leverage as a tool, not as a shortcut to wealth.