Definition ∞ High leverage in trading means using a significant amount of borrowed funds to control a larger position than one’s initial capital. This strategy can substantially increase both potential profits and losses, as even small price movements are magnified. Traders employ high leverage to maximize their market exposure with limited capital. It introduces considerable risk, as a minor adverse price shift can lead to rapid liquidation of the entire position.
Context ∞ In cryptocurrency news, high leverage is frequently discussed concerning volatile market movements and their impact on retail and institutional traders. Regulatory bodies often express concerns about the risks associated with excessive leverage in unregulated markets, leading to calls for stricter controls. Periods of market instability often see large liquidations, which are directly related to the prevalence of high leverage positions.
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