Tim says not to use leverage, yet he doesn't go into great length as to why. I don't completely agree with Tim and I'll explain why. 

 

First and foremost leverage is borrowing more then is in your account from the broker. It's risky, we all know that, but looks at why and when you may consider doing so. When you borrow more then you have you have to think to yourself "If the stock somehow went to zero would this destroy my life?" If the answer is yes, you are using too much leverage and risking your entire life over one stupid stock. If the answer is no, then keep reading. When using leverage monitor every penny. You can lose thousands in seconds, because the more shares you have the more you can gain or lose. If you see the stock even going in a reversal bail, and when on leverage is the time to trade extremely cowardly. Did you make 20 cents a share, but it hit a dollar a share? Hitting a dollar a share is great, but you don't want to risk all your profits waiting for the tip of the trade, you want to make a profit.

 

Remember the broker will get very upset if anything goes wrong with THEIR money and they will demand you pay back immediately or they will find a way to make you pay it back, even if it loses you more money. So, if you decide to use leverage, do so wisely and always remember you could lose everything.