Glossary
Leverage: meaning, example and why it matters
Using borrowed money or margin to control a larger position than your own capital would allow. It magnifies gains and losses alike.
Worked example
With ₹1,00,000 of your own money plus ₹4,00,000 of borrowed or margin funding you control ₹5,00,000, which is 5 times your capital. A 2% rise adds ₹10,000, or 10% of your own money; a 2% fall removes the same ₹10,000.
Illustrative numbers for explanation only. They are not market data, a forecast or a suggestion.
Why it matters
Leverage makes outcomes larger in both directions relative to your own capital, and borrowed money must be repaid whatever happens.
Related terms
See it in practice
Frequently asked questions
Does leverage change the odds of a trade working?
No. It changes the size of the gain or loss for a given price move, not the probability of the move.
Is this page investment advice?
No. Leverage is explained in general terms with illustrative numbers. Market Dekho is not a SEBI-registered Research Analyst or Investment Adviser.
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Start learning free →Educational content, not investment advice. Market Dekho is not a SEBI-registered Research Analyst or Investment Adviser. Spotted a mistake? Email marketdekho01@gmail.com.