Leverage
Leverage is when you use borrowed money to increase the size of your investment.
Quick Reference:
Highly risky. Borrowed funds. Amplifies gains and losses.
Can lose more than you invested.
Expanded Explanation:
Leverage allows investors to control more shares with less of their own money. For example, using a margin loan, you might invest $20000 into shares with only $10000 of your own cash and $10000 borrowed from the broker. If the shares rise, your gains are bigger than if you ahd only used your own money.
However, leverage is a double edge sword. If the shares fall, your losses are also magnified. In extreme cases, you can lose more than your initial investment and still owe money. This should be used very cautiously. While it can be tempting to chase bigger gains, it increases risk and is best left until you have move experience and a strong understanding of market risks.