One of the most controversial actions in finance is to use leverage. Leverage acts as a magnifier both good and bad. If you invest in something profitable, your profits will be boosted, if you invest in a losing asset, well, good luck to you. And that’s the problem as
You only need to get to 0 once to lose the game, whereas you can 100x your money and still go to 0. These flucutations are obviously sped up via leveraging, and sometimes it's this speed that makes you behave emotionally.
You only need to get to 0 once to lose the game, whereas you can 100x your money and still go to 0. These flucutations are obviously sped up via leveraging, and sometimes it's this speed that makes you behave emotionally.