Guides · Easy money, trading and scams: the truth
Leverage and CFDs: why are they so risky?
In short: Leverage lets you take a position larger than your money: with 10x leverage, a 10% drop wipes out your entire stake. CFDs work this way, and most individuals who use them lose money.
How it works
With $100 and 10x leverage, you control $1,000. If the price rises 5%, you gain $50 (50%). If it falls 5%, you lose $50. If it falls 10%, everything is gone.
Margin calls
When your position loses, the broker can close it automatically at the worst moment or ask you to add money.
What the radar says
An ordinary stock often moves 5 to 15% in a month, a crypto much more. With leverage, these ordinary moves are enough to lose everything.