Leverage works best when volume is increasing.

Question

Quizplus · Accepted Answer

Leverage amplifies returns and can lead to higher profits when the volume of trading is increasing. This is because as volume increases, the spread between bid and ask prices typically narrows, providing more opportunities for traders to realize profits through leverage. On the other hand, when volume is decreasing or stagnant, leverage can magnify losses and increase risk. Therefore, it is important to consider trading volumes when utilizing leverage.

Leverage Works Best When Volume Is Increasing