The main downside of employing this tool is the chance of losing your margin, which grows when leverage is increased. The more leverage you have and the more volatile the market, the faster you will lose all of your collateral.
As a result, high leverage should only be employed for short-term trading techniques, as any negative shift may wipe out your position if they maintained the trade for an extended period of time.
As a result, it prohibited brokers in some nations from giving margins bigger than 1:10, so I know the country for safeguarding its residents from financial market losses.
Traders often employ sizes ranging from 1:20 to 1:50, with 1:100 being used only in exceptional circumstances. Margin leverage, commonly known as leverage, emphasizes the principal function of this financial instrument.