Leverage

Leverage means borrowing money to invest, so you can control a larger position than your cash alone would allow. You'll encounter this with options, futures, and margin accounts—tools that let you amplify both gains and losses. It matters because leverage can turn small price moves into outsized returns, but it cuts both ways: you can lose more than you invested. For example, if you use 2:1 leverage to buy tech stocks, a 10% gain becomes 20%, but a 10% drop wipes out your entire stake. Leverage is powerful but risky—most beginners should avoid it until they understand exactly what they're risking.