Leverage

Leverage, in the context of investing, refers to the utilization of borrowed funds to amplify the potential returns or losses of an investment. When an individual or organization is considered ‘highly leveraged,’ it means they are heavily relying on borrowed funds. Leverage is commonly associated with margin trading, where a broker provides a loan to increase the available funds for trading. While leverage can magnify profits, it also entails higher risks, as losses can be multiplied by the leverage factor. Traders should exercise caution and employ risk management strategies when utilizing leverage.