Leverage Trading

Definition ∞ ‘Leverage Trading’ involves using borrowed funds to increase the size of an investment position, thereby amplifying potential profits and losses. In the context of digital assets, this is commonly offered on centralized and decentralized exchanges. It allows traders to control a larger amount of an asset with a smaller capital outlay.
Context ∞ Leverage trading is a persistent subject in financial news, particularly concerning its role in market volatility and the potential for significant investor losses. Discussions often focus on risk management strategies, the impact of liquidation cascades, and regulatory efforts to curb excessive leverage. Key future developments to watch include the evolution of risk-mitigation tools and the regulatory treatment of leveraged products in the digital asset space.