Trading glossary
Leverage means using borrowed funds to gain larger market exposure than your own capital alone. Learn how it works and why it amplifies risk.
Leverage refers to using borrowed money to control a position larger than a trader's own funds would allow. It is often expressed as a ratio, such as 5x or 10x, indicating how much total exposure is taken relative to the capital committed. The same concept underpins products like margin trading and many futures contracts across financial markets.
Because leverage multiplies exposure, it multiplies the effect of price moves in both directions. A small favorable move can produce an outsized gain relative to the capital used, and a small adverse move can produce an outsized loss. This symmetry is central: leverage does not change the direction of a market, only the scale of the result on the capital committed.
Leveraged positions can be closed automatically when losses reach a threshold, an event known as liquidation, which can wipe out the committed capital quickly. Higher leverage narrows the price move needed to trigger this. On Tyrian Trade, leverage is covered for education only; the platform does not offer trading, custody, or execution. Markets involve risk, including loss of capital, and this is not personalized advice.
It means the total position size is ten times the capital committed. A one percent move in the underlying price then corresponds to roughly a ten percent change on that committed capital, in whichever direction the market moves.
Yes. Leverage magnifies both gains and losses. A small adverse price move can cause a large loss relative to the capital used, and losses can reach the point where the position is liquidated and the committed capital is lost.
Liquidation is the automatic closing of a leveraged position when losses reach a set threshold. It is designed to prevent losses beyond the collateral, but it can consume the committed capital quickly, especially at high leverage.