> ## Documentation Index
> Fetch the complete documentation index at: https://docs.entry.fi/llms.txt
> Use this file to discover all available pages before exploring further.

# Leverage explained

Leverage lets you control a larger position than the amount of money you put in. It is usually shown as a multiplier, such as `2x`, `5x`, or `10x`. In Entry Finance, you choose leverage directly from the trading panel, as shown in [Open positions and orders](/using-the-terminal/open-positions-and-orders). If you use `5x` leverage, every `100 USDC` of margin gives you `500 USDC` of market exposure.

# Why traders use leverage

Leverage is useful because it can increase returns on a good trade without requiring a large balance.

People use it when they want to:

* get more exposure with less capital
* trade short-term moves more efficiently
* keep part of their capital free instead of committing everything to one trade

# The trade-off

Leverage increases both profit and loss. That is the part beginners must understand first. If your position is larger, even a small market move has a bigger effect on your [PnL](/trading-basics/pnl-entry-price-mark-price).

# Simple example

You have `100 USDC`.

## Without leverage

You open a `100 USDC` position.

* If price moves up `3%`, you make about `3 USDC`
* If price moves down `3%`, you lose about `3 USDC`

## With 5x leverage

You open a `500 USDC` position using the same `100 USDC` as margin.

* If price moves up `3%`, you make about `15 USDC`
* If price moves down `3%`, you lose about `15 USDC`

The market moved the same amount. The result changed because your exposure was larger.

# Why this matters

Leverage can be helpful, but it is not automatically better.

Higher leverage means:

* faster gains if you are right
* faster losses if you are wrong
* less room before [liquidation](/trading-basics/liquidation-price-and-risk-engine)

That is why many beginners start with low leverage or no leverage at all. In practice, leverage should always be understood together with [Margin explained](/trading-basics/margin-explained), [Cross and isolated margin](/trading-basics/cross-and-isolated-margin), and [Liquidation price and risk engine](/trading-basics/liquidation-price-and-risk-engine).