With 2x leverage, a 10% rise in an asset becomes a 20% gain on your money, and a 10% fall a 20% loss, before interest. Margin loans, CFDs, futures and leveraged ETFs all provide leverage.
If losses reduce the equity in a margin loan below a set level, the lender issues a margin call: add money or have the position sold.
Why it matters
Leverage can turn a temporary fall into a permanent loss, because forced selling happens at the worst prices. Economy-wide, high leverage makes downturns deeper, as borrowers cut spending to repay debt.
General information, not advice.