What is Leverage in Trading?
In trading, there are factors that differentiate a beginner investor from a more experienced one. Learning the basic concepts is essential, but it is also important to understand additional features that can directly impact the results — such as leverage and margin.
At first glance, these terms may seem complicated. However, by understanding how they work, you can increase your potential return, as long as you know how to manage the associated risks.
What is Leverage in Trading?
In trading, there are factors that differentiate a beginner investor from a more experienced one. Learning the basic concepts is essential, but it is also important to understand additional features that can directly impact the results — such as leverage and margin.
At first glance, these terms may seem complicated. However, by understanding how they work, you can increase your potential return, as long as you know how to manage the associated risks.
What is Leverage?
In general, leverage means using something to its maximum potential. In the financial market, the idea is similar: the investor uses additional resources to increase their exposure to their position in the market.
In other words, leverage allows you to operate with amounts greater than your available capital. This amplifies both profits and losses.
Practical example:
With leverage of 1:5, a capital of $100 allows you to control a position of up to $500. If the asset appreciated by 10%, the gain would be $50 instead of just $10. However, if it fell by 10%, the loss would equally be $50.
Important Note
The higher the volatility of an asset, the lower the leverage offered tends to be.
International financial regulators, such as FCA, ASIC, and CySEC, impose leverage limits to protect investors.
What is Margin?
The margin is the amount you need to deposit to open a leveraged position. It acts as a kind of collateral for the broker, allowing you to trade larger positions than you would have with just the initial capital.
Margin: required deposit to open the position.
Leverage: multiple of that deposit.
R$10 leveraged at 5X requires a minimum of R$50 deposited in the account
If the market moves against your position, the broker may request an additional deposit — this is called a margin call. If the investor does not deposit more funds, the brokerage can reduce or close the position automatically (stop-out).
How Leverage Trading Works
The operation is relatively simple:
You deposit an initial margin.
The broker (like Kyvoo) provides the leverage, expanding your exposure.
If the trade is profitable, the gains will be multiplied proportionally.
If the trade is negative, the losses will also be magnified.
Additionally, leveraged positions can incur extra costs, such as overnight financing fees, which vary according to the size of the position and the time kept open.
At Kyvoo, you can trade without extra surprises in costs
Examples of Leverage Trading
Example 1: R$100 with leverage 1:5
Initial margin: R$100
Controlled position: R$500
If the asset rises by 20%, the final balance will be R$200 (profit of R$100).
If it falls by 20%, the balance will drop to R$0 (total loss).
Example 2: R$1,000 with different levels of leverage
Available Capital | Leverage | Total Position | Variation +10% | Variation -10% |
R$1,000 | 1:2 | R$2,000 | R$1,200 | R$800 |
R$1,000 | 1:5 | R$5,000 | R$1,500 | R$500 |
R$1,000 | 1:10 | R$10,000 | R$2,000 | R$0 |
The higher the leverage, the greater the potential for gains, but also the higher the risk of rapid losses.
When to Use (or Avoid) Leverage
Advantages
Opportunity for larger gains with little capital.
Greater flexibility in asset diversification.
Disadvantages
Risk of rapid and significant losses.
Additional costs (such as overnight fees).
Psychological pressure, as small market movements can have a large impact.
Tip: long-term investors generally prefer to buy assets outright rather than use leverage to avoid recurring financing costs.
Safe Leverage is at Kyvoo
The leverage and margin are powerful tools in trading, but they require discipline and risk management.
Leverage increases your exposure in the market.
The margin is the deposit that secures this exposure.
Both can multiply profits, but they also accelerate losses.
If you are a beginner, start with low levels of leverage and practice on a demo account before risking your real capital. Kyvoo offers accessible conditions and educational tools to learn in practice how to use leverage responsibly.
Open your account at Kyvoo
and test strategies with leverage in a safe environment.
Important Note
The higher the volatility of an asset, the lower the leverage offered tends to be.
International financial regulators, such as FCA, ASIC, and CySEC, impose leverage limits to protect investors.
What is Margin?
The margin is the amount you need to deposit to open a leveraged position. It acts as a kind of collateral for the broker, allowing you to trade larger positions than you would have with just the initial capital.
Margin: required deposit to open the position.
Leverage: multiple of that deposit.
R$10 leveraged at 5X requires a minimum of R$50 deposited in the account
If the market moves against your position, the broker may request an additional deposit — this is called a margin call. If the investor does not deposit more funds, the brokerage can reduce or close the position automatically (stop-out).
How Leverage Trading Works
The operation is relatively simple:
You deposit an initial margin.
The broker (like Kyvoo) provides the leverage, expanding your exposure.
If the trade is profitable, the gains will be multiplied proportionally.
If the trade is negative, the losses will also be magnified.
Additionally, leveraged positions can incur extra costs, such as overnight financing fees, which vary according to the size of the position and the time kept open.
At Kyvoo, you can trade without extra surprises in costs
Examples of Leverage Trading
Example 1: R$100 with leverage 1:5
Initial margin: R$100
Controlled position: R$500
If the asset rises by 20%, the final balance will be R$200 (profit of R$100).
If it falls by 20%, the balance will drop to R$0 (total loss).
Example 2: R$1,000 with different levels of leverage
Available Capital | Leverage | Total Position | Variation +10% | Variation -10% |
R$1,000 | 1:2 | R$2,000 | R$1,200 | R$800 |
R$1,000 | 1:5 | R$5,000 | R$1,500 | R$500 |
R$1,000 | 1:10 | R$10,000 | R$2,000 | R$0 |
The higher the leverage, the greater the potential for gains, but also the higher the risk of rapid losses.
When to Use (or Avoid) Leverage
Advantages
Opportunity for larger gains with little capital.
Greater flexibility in asset diversification.
Disadvantages
Risk of rapid and significant losses.
Additional costs (such as overnight fees).
Psychological pressure, as small market movements can have a large impact.
Tip: long-term investors generally prefer to buy assets outright rather than use leverage to avoid recurring financing costs.
Safe Leverage is at Kyvoo
The leverage and margin are powerful tools in trading, but they require discipline and risk management.
Leverage increases your exposure in the market.
The margin is the deposit that secures this exposure.
Both can multiply profits, but they also accelerate losses.
If you are a beginner, start with low levels of leverage and practice on a demo account before risking your real capital. Kyvoo offers accessible conditions and educational tools to learn in practice how to use leverage responsibly.
Open your account at Kyvoo
and test strategies with leverage in a safe environment.
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What is Leverage in Trading?
In trading, there are factors that differentiate a beginner investor from a more experienced one. Learning the basic concepts is essential, but it is also important to understand additional features that can directly impact the results — such as leverage and margin.
At first glance, these terms may seem complicated. However, by understanding how they work, you can increase your potential return, as long as you know how to manage the associated risks.
What is Leverage?
In general, leverage means using something to its maximum potential. In the financial market, the idea is similar: the investor uses additional resources to increase their exposure to their position in the market.
In other words, leverage allows you to operate with amounts greater than your available capital. This amplifies both profits and losses.
Practical example:
With leverage of 1:5, a capital of $100 allows you to control a position of up to $500. If the asset appreciated by 10%, the gain would be $50 instead of just $10. However, if it fell by 10%, the loss would equally be $50.
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Important Note
The higher the volatility of an asset, the lower the leverage offered tends to be.
International financial regulators, such as FCA, ASIC, and CySEC, impose leverage limits to protect investors.
What is Margin?
The margin is the amount you need to deposit to open a leveraged position. It acts as a kind of collateral for the broker, allowing you to trade larger positions than you would have with just the initial capital.
Margin: required deposit to open the position.
Leverage: multiple of that deposit.
R$10 leveraged at 5X requires a minimum of R$50 deposited in the account
If the market moves against your position, the broker may request an additional deposit — this is called a margin call. If the investor does not deposit more funds, the brokerage can reduce or close the position automatically (stop-out).
How Leverage Trading Works
The operation is relatively simple:
You deposit an initial margin.
The broker (like Kyvoo) provides the leverage, expanding your exposure.
If the trade is profitable, the gains will be multiplied proportionally.
If the trade is negative, the losses will also be magnified.
Additionally, leveraged positions can incur extra costs, such as overnight financing fees, which vary according to the size of the position and the time kept open.
At Kyvoo, you can trade without extra surprises in costs
Examples of Leverage Trading
Example 1: R$100 with leverage 1:5
Initial margin: R$100
Controlled position: R$500
If the asset rises by 20%, the final balance will be R$200 (profit of R$100).
If it falls by 20%, the balance will drop to R$0 (total loss).
Example 2: R$1,000 with different levels of leverage
Available Capital | Leverage | Total Position | Variation +10% | Variation -10% |
R$1,000 | 1:2 | R$2,000 | R$1,200 | R$800 |
R$1,000 | 1:5 | R$5,000 | R$1,500 | R$500 |
R$1,000 | 1:10 | R$10,000 | R$2,000 | R$0 |
The higher the leverage, the greater the potential for gains, but also the higher the risk of rapid losses.
When to Use (or Avoid) Leverage
Advantages
Opportunity for larger gains with little capital.
Greater flexibility in asset diversification.
Disadvantages
Risk of rapid and significant losses.
Additional costs (such as overnight fees).
Psychological pressure, as small market movements can have a large impact.
Tip: long-term investors generally prefer to buy assets outright rather than use leverage to avoid recurring financing costs.
Safe Leverage is at Kyvoo
The leverage and margin are powerful tools in trading, but they require discipline and risk management.
Leverage increases your exposure in the market.
The margin is the deposit that secures this exposure.
Both can multiply profits, but they also accelerate losses.
If you are a beginner, start with low levels of leverage and practice on a demo account before risking your real capital. Kyvoo offers accessible conditions and educational tools to learn in practice how to use leverage responsibly.
Open your account at Kyvoo
and test strategies with leverage in a safe environment.