---
title: "Leverage"
description: "Leverage is the multiplier applied to a strategy's position sizes: above 1.00× it holds more exposure than its capital and pays to finance the difference."
canonical_url: "https://fincanva.com/docs/backtesting/leverage"
last_updated: "2026-09-03"
md_url: "https://fincanva.com/docs/backtesting/leverage.md"
---

# Leverage

Leverage is the multiplier applied to a strategy's position sizes in an allocation profile: at 1.00× the positions add up to the strategy's capital, above 1.00× they add up to more than its capital, and below 1.00× to less. Holding more exposure than you have capital for means borrowing the difference, so leverage above 1.00× carries a financing cost that a strategy at 1.00× does not have. In the app the control is "Leverage", with the hint "Multiplier on position sizes. 1.00 = no leverage. Range 0.00 – 2.00."

**Also seen as:** gearing, multiplier, margin.

## How much exposure does a leverage multiplier create?

Multiply the strategy's capital by the multiplier; anything above the capital is borrowed.

$$
E = L \times C \qquad B = \max(L - 1,\; 0) \times C
$$

where $L$ is the leverage multiplier, $C$ is the strategy's capital, $E$ is the resulting market exposure, and $B$ is the borrowed amount that has to be financed. Below 1.00× nothing is borrowed and the unused share of capital — $(1 - L) \times C$ — simply stays in cash: a 0.70× profile is 70% invested and 30% cash, with the same [cash drag](/docs/backtesting/cash-drag) that any idle balance carries.

## What are the leverage presets?

Four presets cover the range, with a slider for anything in between:

| Preset | Leverage | Exposure per unit of capital |
|---|---|---|
| **Cash only** | 0.00× | none — no positions are held |
| **No leverage** | 1.00× | exposure equals capital |
| **Moderate** | 1.50× | 1.5 units of exposure, 0.5 borrowed |
| **Max** | 2.00× | 2 units of exposure, 1 borrowed |
| **Custom** | any value from 0.00× to 2.00× | as set |

## What does leverage cost?

Above 1.00×, the borrowed part is financed for as long as it is held. The rate charged is a short-term reference interest rate plus the **borrowing rate markup**, the spread described in the app as "Spread added above the broker rate when borrowing capital." — see [interest-rate markups](/docs/backtesting/interest-rate-markups) for both markups and their defaults.

That cost is charged only when the [Costs & interests assumption](/docs/backtesting/costs-toggle) is on. With costs off, a leveraged run shows the magnified gains and losses but none of the financing that produced them, which flatters leverage specifically. It lands on the "Interest paid" line of the results — see [interest received and paid](/docs/analysis/interest-received-and-paid).

## What does leverage do to gains and losses?

It multiplies both, by the same factor and in the same direction. A market move of $r$ on the exposure is worth $L \times C \times r$ to the strategy, so at 1.50× a 10% move is worth 15% of capital whether the market went up or down. There is no asymmetry: the multiplier that magnifies a good year magnifies a bad one identically, and a leveraged strategy can fall further and faster than the same strategy at 1.00×.

The financing cost sits on top of that and does not care about direction. It is subtracted after a gain and added to a loss, so a leveraged run needs the magnified gain to clear the financing before it is ahead of the unleveraged version.

## Defaults in Fincanva

- The default is **1.00× (No leverage)**, and the range is 0.00× to 2.00× — 2.00× is the most exposure a profile can hold on a plan that grants it.
- **The 2.00× ceiling is not open to every plan.** Free and Starter cap the leverage field itself at **1.00×** — the field is capped at that value in the app, with a tag naming the [plan step](/docs/account-security/plan-step) that raises it. Advanced, Ultimate and Professional keep the full 0.00×–2.00× range. This is an app-side cap: the simulation engine carries no concept of a plan and applies none of this on its own.
- Leverage belongs to an allocation profile, so a Risk-Off profile can carry a different multiplier from the Risk-On one — including **Cash only** — see [Risk conditions](/docs/strategies/risk-conditions).
- The profile summary line prints the multiplier next to the allocation method, as in "· 1.50×".
- At **Cash only (0.00×)** no positions are opened at all; the run tracks an uninvested balance.
- Leverage is the strategy-level exposure control. How much of a Combined's capital reaches its strategies in the first place is the [invested portion](/docs/backtesting/invested-portion), a separate control at the Combined level.

## Worked example

A strategy with **10,000** of capital runs a year at **1.50× (Moderate)**. Its exposure is 1.5 × 10,000 = **15,000**, of which **5,000** is borrowed. Suppose the reference rate is 4% and the borrowing markup is the default 1.5%, so the borrowed money costs 5.5% for the year: 5,000 × 5.5% = **275**.

| Market move on the exposure | Gain or loss | Financing | Result on 10,000 of capital |
|---|---|---|---|
| **+10%** | +1,500 | −275 | **+1,225** (+12.25%) |
| **−10%** | −1,500 | −275 | **−1,775** (−17.75%) |

The same strategy at 1.00× would have made +1,000 or lost 1,000, with no financing at all. Leverage turned a 10-point market move into a 12.25-point gain or a 17.75-point loss — and the 275 was paid in both cases, which is why the downside is magnified by slightly more than the upside.

*Leverage magnifies losses exactly as it magnifies gains. Fincanva does not recommend a leverage level or tell you whether to use leverage at all — see [Is this financial advice?](/docs/investing-theory/is-this-financial-advice#is-this-financial-advice).*