If you’re levered 10-1, you only have to lose 10% to get wiped out completely, and the firm that lent you that money will force you to liquidate to try to pay t

If you’re levered 10-1, you only have to lose 10% to get wiped out completely, and the firm that lent you that money will force you to liquidate to try to pay them back - a “margin call”. Even if it’s not a total wipeout, it’s likely you need to liquidate some assets to meet your margin as lenders reevaluate your risk to be higher than they thought. Enough people do that fast enough, and prices of other assets fall, others who are levered need to cover, and on and on until you have a widespread problem. Leverage is great on the way up and horrifyingly terrible on the way down.