Leverage allows traders to control a larger position than their initial investment by borrowing funds from a broker or exchange. For example, if a trader uses 10x leverage, they can control a position worth $10,000 by only depositing $1,000 as margin. This magnification of exposure can lead to substantial profits if the market moves in the trader's favor. 

However, leverage also increases the risk of losses. If the market moves against a trader's position, the losses can exceed the initial investment. For instance, using 10x leverage means that a 10% price drop in the underlying asset can wipe out the entire investment. As a result, managing leverage carefully is crucial for maintaining a sustainable trading strategy. 

Margin refers to the amount of capital required to open and maintain a leveraged position. When a trader uses leverage, they must deposit a certain percentage of the total trade value as margin. This margin acts as collateral and ensures that the trader can cover potential losses. 

There are two types of margin: initial margin and maintenance margin. The initial margin is the amount required to open a leveraged position, while the maintenance margin is the minimum amount that must be maintained in the account to keep the position open. If the account balance falls below this threshold, the broker may issue a margin call, requiring the trader to deposit more funds or close the position.