Leverage is borrowed exposure that lets a small amount of your own money control a much larger position. Expressed as a ratio like 1:100, it multiplies both potential gains and potential losses by the same amount. Leverage does not change how risky a trade is by itself — your position size and stop loss do — but it makes oversizing dangerously easy.
With 1:100 leverage, $1,000 of margin can control a $100,000 position. A 1% move in your favour is a large gain; a 1% move against you can wipe out the whole $1,000.
This definition is for educational purposes only and is not financial advice. Trading involves risk.