What is Leverage?

Leverage is the ability to increase the size of your trade by using what is effectively a synthetic credit. For example if you have leverage factor of 20, it implies that for every pound you deposit, you can gain twenty pounds of exposure. This concept allows you to take greater size positions that would normally be possible, which has the same knock on impact for potential profits and losses, meaning you are exposed to greater level of risk than trading without leverage. You must always be aware of the leverage you are trading and the margin (deposited funds) required to maintain these positions.