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Investing & the Stock Market vocabulary · Orders & Trading

Leverage

Meaning in investing & the stock market, with examples

/ˈlevərɪdʒ/nounCommon term

In investing & the stock market, leverage means: The use of borrowed money or financial products to control a larger investment than your own money would allow, which increases both possible gains and losses.

In Turkish: kaldıraç, borçla finansman

How it is used

Common in trading, derivatives and corporate finance. Platforms offer leverage of, for example, 1:10; traders use or reduce leverage. For companies, it means how much debt they carry. The verb 'leverage' also means 'make good use of' in general business English.

Example sentences

  1. With ten times leverage, a 5 percent price drop wipes out half of your capital.

  2. Investors are worried about the high leverage of some property developers.

Common collocations

  • use leverage
  • high leverage
  • reduce leverage
  • leveraged position
  • leveraged ETF
  • margin tradingBuying securities with money partly borrowed from a broker, using the investments in the account as security for the loan.
  • futures contractA standard contract traded on an exchange that obliges the buyer and seller to trade an asset at a fixed price on a future date. Both sides must keep a margin deposit.
  • derivativeA financial contract whose value depends on the price of something else, such as a share, an index, a currency, an interest rate or a commodity.
  • risk toleranceHow much loss or how big a swing in value an investor is willing and able to accept in exchange for the chance of higher returns.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Orders & Trading

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This page explains English vocabulary for learners. It is not financial advice.