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# Leverage Trading 101: How to Control Big Positions With Small Capital



Leverage is basically your broker lending you money to amplify your trading position. Put up $2,000, and you could control a $40,000 position with 20x leverage. Sounds good? Here's the catch – your P&L is calculated on the full $40,000, not your $2k deposit.

**The mechanics:**
You deposit margin (your collateral) → Broker loans you the rest → You gain bigger exposure to price moves → Profit or loss scales with full position size, not your deposit.

**Real example:**
Want to short Bitcoin at $45,000? With 10x leverage, you'd only need $4,500 margin to control a $45,000 BTC position. If BTC drops 10%, you pocket $4,500 profit (100% return on margin). If it pumps 10%, you're liquidated.

**Key takeaway:**
Leverage is a double-edged sword – amplifies both gains AND losses. Most traders blow accounts when they underestimate the downside. Start small, manage risk, use stop-losses.
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