Leverage
Leverage is borrowed buying power. It lets you control a position whose notional value is a multiple of your account, and it magnifies profits and losses in the same proportion.
It is quoted as a ratio such as 1:30 or 1:100. The deposit the platform locks for a position is margin: notional value divided by leverage. One standard lot of EURUSD at 1.1000 has a notional value of $110,000; at 1:100 leverage it requires $1,100 of margin.
Leverage does not change what a pip is worth — it changes how large a position you are able to open. The risk in a trade comes from position size and stop distance, not from the leverage ratio itself. High leverage simply makes it possible to take sizes your account cannot absorb.
Example
Two accounts hold $10,000 and have identical leverage available. Both buy EURUSD with a 20-pip stop. One trader opens 0.25 lots and risks $50; the other opens 2.00 lots and risks $400. Same pair, same stop — the only difference is the size that leverage made possible.
In a prop-firm challenge
Evaluation accounts run on virtual funds, but the leverage offered still shapes behavior. With enough leverage, a $10,000 account can hold positions where a routine 30-pip move costs $300 or more — over half of a typical 4–5% daily loss limit in a single trade. Most failed evaluations trace back to size rather than to a broken strategy, as covered in why traders fail challenges.