Orders, Bid/Ask & Leverage
How trades execute, what the spread is, and why leverage is dangerous.
In Simple Words
A market order buys or sells immediately at the best available price. A limit order only fills at your price or better. A stop order triggers a market order once a price is hit. The bid is what buyers offer; the ask is what sellers want; the gap between them is the spread. Leverage lets you control a larger position with less money — it magnifies both gains and losses.
Why It Matters
Understanding execution and leverage is the difference between controlled risk and catastrophic loss.
Key Terms
The difference between the bid and ask prices.
Borrowed buying power that magnifies gains and losses.
A planned exit price to limit a losing trade.
How much capital you risk on a single trade.
How to Interpret It
With 10× leverage, a 10% adverse move can wipe out your entire position. Leverage turns small mistakes into account-ending losses.
Beginner Mistakes
- Using leverage without understanding liquidation risk.
- Trading without a stop-loss plan.
Try It Yourself
Write down a hypothetical trade with an entry, a stop-loss and a target. Compute the risk/reward ratio before ever placing a real order.
Key Takeaway
Leverage magnifies losses as much as gains. Never trade without a stop-loss plan.
Open the real tool to practice.
Knowledge Check
Choose an answer, then check.1. Leverage magnifies…
2. A stop loss is used to…
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