Overleveraging

Overleveraging means using a position size (relative to account equity) that is too large for the account to comfortably absorb normal market volatility, greatly increasing the risk of a margin call or a large, damaging loss. It's one of the most common reasons new leveraged traders blow up an account, even when their trade analysis was directionally correct. The fix isn't avoiding leverage entirely — it's sizing each position from account risk tolerance and stop-loss distance (position sizing), rather than simply using the maximum leverage a broker offers.