Definition ∞ Leveraged Trades involve using borrowed capital to increase the potential return on an investment, amplifying both gains and losses. Traders employ leverage to control a larger position in an asset than their own capital would permit, typically through derivatives like futures or options. While offering the prospect of substantial profits, these trades carry a significantly elevated risk of liquidation. They are a common feature in highly liquid and volatile markets.
Context ∞ In cryptocurrency news, leveraged trades are frequently cited in discussions of market volatility, liquidations, and the financial health of exchanges. The availability of high leverage on digital asset platforms often contributes to rapid price swings and market cascades. Regulatory bodies globally are scrutinizing the offering of such products to retail investors, aiming to implement safeguards against excessive risk-taking and market manipulation.
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