Why is using high leverage risky?

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Using high leverage is risky because it magnifies your potential losses in the same way as it magnifies your potential profits. And if you do not have sufficient margin for your account to absorb the price swings of a volatile market, then your trade could get stopped out, even if the direction of your trade was correct.

 

This is because price never moves in a straight line, and depending on the underlying market, price can swing from high to low very sharply before a trend is established.

 

This is why you should never risk more capital than you can afford to lose, be conservative in your use of leverage, and stick to a risk management strategy that you are comfortable with. 

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