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What is leverage in crypto trading?

Leverage lets you control a position larger than your capital by borrowing the difference from the exchange — 10x leverage turns $1,000 into $10,000 of exposure. It multiplies profits and losses by exactly the same number, and adds a failure mode cash buyers never face: liquidation.

How it works

You post margin (your own money) and the exchange lends the rest. At 10x, a 1% move in your favor earns 10% on your margin; a 1% move against you loses 10%. Push that adverse move to roughly 1/leverage — about 9.5% at 10x after the maintenance buffer — and the position is liquidated. Leverage never changes the market's behavior; it changes how long you can afford to be wrong.

The part beginners miss

Leverage and risk are separate dials. A professional using 5x on 2% of their account risks less than a beginner using 2x on half of it. What actually decides your risk is position size relative to equity and stop distance — leverage just determines how much collateral the trade ties up, and how close the liquidation trapdoor sits. That's why our rule is stated backwards from the ads: pick the risk first (1%), derive the size, and let leverage be whatever small number makes that size possible.

Numbers that build intuition

At 2x, price must fall ~49.5% to liquidate a long — a market crash. At 10x, ~9.5% — a bad day in crypto. At 50x, ~1.5% — ordinary hourly noise. At 100x the distance sits inside many coins' normal spread wobble. The liquidation calculator turns your own numbers into that distance before the exchange does.

FAQ

Is leverage always bad? No — hedging a spot portfolio or shorting requires it, and low leverage with proper sizing is a professional tool. It's high leverage as a shortcut for small accounts that reliably ends accounts.

What leverage should a beginner use? On spot: none, which is the point of starting on spot. If later using futures: low single digits, with the stop-loss always firing far before liquidation.

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