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Nainder Sarao sits in jail because he cannot raise the £5M bail that is required for his release. He has apparently made millions while living in his parents' basement, but doesn't have access to the money because his accounts have been frozen. What is claimed by US authorities is that "... Mr Sarao placed "spoof" trades in E-Mini S&P derivatives in a bid to push the market in his favour. The orders would be placed and withdrawn in rapid succession using a customised computer programme, they allege", which sounds a lot like high-frequency trading. Perhaps his real crime was to copy the techniques of wealthy high-speed traders?
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UK Citizen in Jail for Causing "Flash-Crash", or Just High-Frequency Trading?
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You single-handedly fought your way into this hopeless mess.
(Score: 0) by Anonymous Coward on Sunday May 24 2015, @09:35PM
Generally when leverage is mentioned it is referring to a simple loan from whatever company you are trading through. In your example, if the $11,000 stocks went down to $6,000 you have lost $5,000 and have a $10,000 debt to pay back at a high interest rate. You effectively are borrowing money from a guy outside a casino because you believe a certain machine will be paying out for you in the very near future.
There are ways to reduce risk trading stocks, but leverage is not one of them.