Margin, and what leverage actually does

Margin is money set aside to cover the risk a position creates. When you buy something, the exchange requires that a fraction of the exposure be funded up front, and it recalculates the requirement as prices move. Leverage is the inverse of that fraction: a 25% margin requirement means an exposure four times the cash put up. The exposure is what the account experiences; the margin is what the account must prove it can lose.

Margin requirements in intraday equity are computed against the peak of the position during the day, not the position at the close. If the account's margin fell short at any moment — even a moment later fully covered — the shortfall attracts a penalty on the exchange side. The rule punishes the peak, deliberately: an intraday position is risk the entire time it exists, and "it was covered by the close" does not make the uncovered minute safe.

Losses multiply the same way gains do. At four times exposure, a 25% adverse move removes the entire margin — and at that point the position no longer satisfies the requirement it was opened under. Leverage does not change the market; it changes how much of the market one account is exposed to, and therefore how large a normal, unremarkable market move is, measured against that account. Nothing about the arithmetic is an opinion about whether anyone should use it — it is just what the numbers do.