Leverage is a financial tool that allows traders to increase their exposure to an instrument without needing to invest the full amount of capital required to own the asset outright. With leverage, traders can open positions using only a fraction of the total value of the position, thus amplifying the potential returns on their investment.

However, it's crucial to understand that while leverage can magnify profits, it also amplifies losses. Therefore, traders must exercise caution and implement risk management strategies when using leverage in their trades.