Leverage and margin are closely related concepts in trading, but they serve different purposes. Leverage is the ability to control a larger trading position with a smaller amount of capital, expressed as a ratio such as 1:50 or 1:100, allowing traders to amplify potential profits—but also potential losses. Margin, on the other hand, is the actual amount of money a trader must deposit with the broker to open and maintain a leveraged position. Essentially, margin is the trader’s collateral, while leverage is the multiplier that determines how much market exposure that collateral provides. Understanding the relationship between leverage and margin is crucial for effective risk management and avoiding excessive losses.