Leverage

Leverage means borrowing money to invest, so you can control a larger position than you could afford outright. You'll encounter it with options, futures, and margin accounts—basically anywhere you can amplify your bets. It matters because leverage cuts both ways: it magnifies your gains when you're right, but it also magnifies your losses when you're wrong, potentially wiping out your entire investment or even leaving you owing money. For example, if you use 2:1 leverage to buy a stock, a 10% price drop means you lose 20% of your own cash. It's powerful but risky, so most beginners should avoid it until they really understand what they're doing.