Definition ∞ High leverage trading involves using borrowed capital to significantly amplify the potential returns or losses from an investment in digital assets. Traders employ this strategy to control a large position with a relatively small amount of their own capital. While it offers the opportunity for substantial gains from minor price movements, it also carries a correspondingly elevated risk of rapid and significant capital depletion. This practice is common in derivatives markets.
Context ∞ The discussion around high leverage trading in cryptocurrency markets frequently highlights its role in market volatility and liquidations. A key debate involves the appropriate regulatory oversight for platforms offering such instruments to retail investors, given the inherent risks. Critical future developments include enhanced risk management tools, stricter platform regulations, and educational initiatives aimed at informing users about the dangers associated with amplified exposure.
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