Leverage lets you control a position larger than your account balance. At 1:500 leverage, $1,000 of margin controls $500,000 of notional exposure.
Pros: capital efficiency — the same dollar amount controls more position.
Cons: losses scale at the same rate as gains. A 1% adverse move on a 1:500 position wipes out half the account.
Practical guidance: most professional traders use far less leverage than the broker offers. 1:20 to 1:50 is common. 1:500 is the cap, not the recommended setting.
