Leverage is a double-edged sword in Forex trading. While it allows you to control larger positions with a smaller capital outlay, it also amplifies both gains and losses. For example, a 1:100 leverage ratio means you can control $100,000 with just $1,000. However, a small adverse price movement could wipe out your account. Use leverage responsibly by risking only a small percentage of your capital per trade. Always calculate your position size carefully and use stop-losses to protect against excessive losses. Leverage can be a powerful tool if used wisely but can be disastrous if mismanaged. Trade smart.