Leverage is a tool that allows you to control a large amount of money with a small investment. This magnifies your potential profits, but it also magnifies your potential losses. For example, if you use 100 1 leverage, you can control $100,000 with just $1,000. But remember, while leverage can increase potential profits, it can also increase potential losses.
Risk management in trading refers to the use of strategies to control or mitigate the financial risk associated with trading. This can involve setting stop-loss orders to limit potential losses, diversifying your portfolio across different asset classes, or only risking a small percentage of your trading capital on any single trade.
