Recently, I’ve seen a lot of people discussing high-leverage trading—some make a fortune, while others get liquidated right away. Honestly, leverage is like a double-edged sword: if you use it well, it can amplify your gains; if you use it poorly, you end up digging your own grave.

To put it simply, leveraged trading is borrowing money to invest. If you have 100,000, borrow 900,000 from the broker, for a total of 1,000,000 to trade, that’s 10x leverage. It sounds tempting because as long as the market moves in the direction you expect, your profits can multiply. But on the other hand, losses are also multiplied.

The case that left the deepest impression on me was one involving Korean YouTuber Satto in 2022. In a live stream, he went long on Bitcoin—when BTC was at 41,666, he opened a 25x leveraged long position. Then Bitcoin dropped below 40,000, and later he even increased his leverage. In the end, within just a few hours, he lost more than 10,000,000 USD. This isn’t meant to scare people—it truly happened.

There are many kinds of leverage tools. Futures are the most common—like Taiwan index futures. One contract is worth 2.6 million, but you only need to pay 136,000 in margin to control it, which is about 19x leverage. Do the math: if the Taiwan index rises 5%, you can earn a 96% return, but if it falls 5%, your principal is almost wiped out. Options, contracts for difference (CFDs), and leveraged ETFs are also commonly used tools, each with its own characteristics.

Why use leverage? Mainly to improve capital efficiency. With 100 dollars, you can trade products worth 1,000 or even 10,000 dollars. When you’re profitable, the returns are indeed very attractive. But the problem is that high leverage is most likely to trigger liquidation when market volatility is high. Once your losses exceed the margin, the broker will force-close your position—this is what people call a “head chop” (being cut off).

My advice is: if you really want to play with leverage, you should start by practicing with low multiples. Set your stop-loss level and strictly control your risk. Don’t let the mindset of “if you win, you’ll profit big” fool you—the market is always more ruthless than you think. Robert Kiyosaki once said that using leverage appropriately is a way to increase returns, but the key is how to make good use of the borrowed money—not blindly chasing high leverage.

In plain terms, leverage itself isn’t absolutely good or bad—the real issue is how you use it. If you can use leverage to increase returns while controlling risk, then yes, it can be a solid trading tool. But if you’re only thinking about getting rich overnight, then it’s worth reflecting carefully.