Money that a trader borrows from a brokerage, enabling them to gain far greater exposure to a position than what their capital allows.
The term leverage relates to the extent by which a trader’s position and hence profitability has risen through the loan.
It is also known as the amount of debt borrowed by a firm to fund assets.
Leverage is used by investors to increase their purchasing power in the market.
Shorting is an investment technique a trader may adopt if prices are expected to fall. Meanwhile, going long is a strategy that can be implemented when the price of a cryptocurrency is expected to appreciate.
The amount of leverage that an investor can access will depend on the trading platform they choose, as well as the digital asset they are wishing to gain exposure to.
Some countries have sought to clamp down on margin trading amid fears that it could cause extensive losses among less experienced investors.
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