Controlling a position larger than your capital, which multiplies both gains and losses.
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.
Leverage comes from margin in stocks, from the contract size in futures-contracts and options, and from the broker in forex and crypto perpetuals. The ratio is notional-value divided by capital used.
Leverage does not create an edge; it scales whatever you already have, including losses and slippage. Most blowups are ordinary strategies run with too much of it.
Example: $5,000 controls one es contract worth $250,000, which is 50x leverage. A 2% drop in the index is a $5,000 loss, or 100% of the capital used.