Futures & Derivatives

Leverage explained

Leverage – x2, x10, x100

Quick definition: Leverage means borrowing extra capital from the exchange to open a position larger than the money you have. It amplifies profits, but losses and the risk of liquidation grow by the same factor.

10x leverage means 100 USDT can open a position worth 1,000 USDT. If the price moves 1% in your favor you make 10%; 1% against you and you lose 10%.

The higher the leverage, the closer the liquidation price is to your entry. At 50x, a move of only about 2% against you can wipe you out.

Beginners should use low leverage (2–5x), decide in advance how much they are willing to lose per trade, and always set a stop loss.

💡 Example

100 USDT, 20x leverage, Long BTC. BTC rises 3%: profit of 60 USDT (60%). BTC falls 5%: the position is almost liquidated, losing nearly all 100 USDT.

📊 Position size calculator based on risk →

Related terms

MarginMargin is the money you put up as collateral to open and hold a leveraged position. There are two main modes: …Liquidation priceThe liquidation price is the price at which the exchange automatically closes your leveraged position.…LiquidationLiquidation happens when a leveraged position has lost almost all of its margin, and the exchange automaticall…R:R ratioR:R is the ratio between the amount you could lose (the distance to your stop loss) and the amount you could g…

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Educational content for reference only, not financial advice. Leveraged trading carries the risk of losing your entire capital.