Simply put, leverage gives you the ability to trade beyond your account funds. With leverage, you can double your trading in a certain financial instrument without having to pay all the required funds. This means that you borrow a certain amount of money needed for the investment. So when you trade with leverage, all you pay is part of your position value.

A CFD is a form of leveraged trading. As the amount required to open and maintain a position is called "margin", leveraged trading is known as "margin trading". The term "leverage" is often used to denote that a small fluctuation in the price of a CFD can be magnified into a large change in profit and loss, with the degree of profit and loss depending on the degree of leverage used.

For example, a $1,000 balance with a 1:50 leverage ratio has a trading ability of $50,000, allowing traders to purchase financial products worth up to $50,000.