Why more leverage doesn't automatically equal more risk.
More leverage is like a credit card with a higher limit, just because you have a higher amount you can borrow doesn't mean you actually have to use it. More leverage doesn't equal more risk unless you also increase your lot sizes.
Margin trading allows traders to amplify their buying power by using leverage provided by their broker, enabling them to control larger positions with a relatively smaller amount of capital. While leveraging can increase potential profits, it also raises concerns about heightened risk. However, using more leverage doesn't automatically equate to more risk.
Understanding Margin and Leverage
Before delving into the relationship between margin and risk, it's essential to grasp what margin and leverage mean in trading:
