Leverage In Stock Market
Leverage is a loan provided by a broker, enabling traders to hold larger positions with less upfront capital, often called Margin Trading Facility (MTF) or margin funding. Expressed as multiples like 2x, 3x, or 4x, it amplifies trading capacity. For instance, with 4x leverage on a ₹1,00,000 trade, you invest ₹25,000, while the broker funds the remaining ₹75,000. This allows greater market exposure, magnifying both potential gains and losses, making it a high risk high reward tool for traders aiming to maximize returns.
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