Leverage lets you control a large Forex position with a relatively small deposit, called margin. For example, with leverage you might open a Forex position many times larger than the cash you put up. This amplifies your exposure to the Forex market — and it is the single most important concept to understand before trading Forex, because it cuts both ways.
Margin is the portion of your account set aside to keep a Forex position open. If the market moves against you and your account equity falls too far, you may receive a margin call or have positions automatically closed to prevent further loss. The higher the leverage on Forex, the smaller the adverse move needed to trigger this, which is why experienced traders often use far less leverage than the maximum available.
Used responsibly, leverage is a tool for capital efficiency, not a way to take outsized bets. The disciplined approach is to size each Forex position by the risk you are willing to lose — not by the leverage you can access. Keep plenty of free margin, set stop-losses on every Forex trade, and treat high leverage with the caution it deserves.