Question 1

What is the difference between leverage and margin?

Accepted Answer

Margin is the cash you put up as collateral to open a leveraged position. Leverage is the result: it is how much larger your position is than the cash behind it. You post margin, and the size beyond your cash is the leveraged part.

Question 2

What is a margin call?

Accepted Answer

A margin call is a demand from your broker to add funds or reduce positions once losses push your account equity below the maintenance margin. If you do not meet it, the broker can close your positions for you, often at a bad price.

Question 3

Does leverage increase my risk?

Accepted Answer

Yes. Leverage multiplies both gains and losses on the same price move. The higher the leverage, the smaller the adverse move it takes to wipe out a large share of your account, and with some products you can lose more than you deposited.