Leverage: borrowed risk
Lesson 8 of 12 in our free Crypto, Hype & Finfluencers guide: a 5-minute money game with the key points below.
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Questions you'll answer
With 10x leverage, how big a price DROP wipes out your whole stake?
Dex uses 20x leverage. What percentage price drop wipes him out?
Quick facts
- Fact: “Leverage makes gains bigger AND losses bigger.” — It cuts both ways.
- Fact: “Most retail traders using high-risk leveraged products lose money.” — Firms offering some leveraged products in the UK must show what percentage of their customers lose money — usually most of them.
- Myth: “UK retail customers can buy crypto derivatives with leverage from FCA-authorised firms.” — The FCA has banned the sale of crypto derivatives to retail consumers.