Last Updated on 15 January, 2025 by Abrahamtolle

In trading, you need a positive expectancy, and you might want to use leverage to utilize that edge. However, the balance between greed and fear is always a thin line. If you lose most or all of your capital, it’s very tough to fight back. We asked: Should you use leverage in trading?

Our reader poll reveals that 83% of traders use leverage frequently or occasionally.

We have conducted plenty of reader polls, and you find them all in our article about trading strategy statistics and facts. 

Leverage and risk

It’s tempting to use leverage if you have a good trading strategy: if you made 10% last year, you might convince yourself you should have had 20% if you used 2x leverage. 

It looks so easy!

But with leverage, you increase your exposure to trading biases. How do you react to drawdowns? Do you stop or continue?

Most traders tolerate smaller drawdowns than they imagine. It all looks so easy in hindsight, but it’s not. 

Also, if you lose 50% of your equity you need to make 100% to get back to break even. 

Volatility is demanding, but it’s also rewarding if you do it right. 

We asked our Twitter followers the following:

What’s your view on using leverage in trading?

This was the result:

What's your view on using leverage in #trading?

(Please leave a comment for other options!)

— Quantified Strategies – Facts & Statistics (@QuantifiedStrat) November 21, 2023

Almost all traders use leverage! 

43% use leverage frequently, while 40 use it occasionally. This means 83% of the respondents use leverage. 

The numbers are surprisingly high.