How Leverage Really Works
See what leverage changes — and what it does not — using real numbers.
Leverage lets you open a position larger than the collateral you put up. At 10x, $1,000 of margin controls a $10,000 position. It is the feature that makes perps powerful — and the one that empties most accounts.
Margin required = position value ÷ leverage- Position value:
- Size × price, e.g. 0.5 BTC × $60,000 = $30,000
- Leverage:
- The multiple you choose, up to the coin's maximum
What leverage changes
Leverage does not change your dollar PnL for a given position size — a $30,000 BTC long gains $300 on a 1% move whether it uses 3x or 30x. What it changes is how much margin is tied up, and therefore your return on that margin and how close you are to liquidation.
| 2x → position $2,000 | A 10% move = ±$200 (±20% of margin) |
|---|---|
| 10x → position $10,000 | A 10% move = ±$1,000 (±100% of margin) |
| 25x → position $25,000 | A 4% move against you ≈ the whole margin |
At 10x, a 10% adverse move wipes out your margin. In crypto, 10% can happen in an afternoon.
Effective leverage
The leverage slider sets the maximum for new orders. What matters for risk is your effective leverage: total position value divided by your account equity. If you open a $5,000 position with a $10,000 account, your effective leverage is 0.5x even if the slider says 20x.
Key takeaways
- Margin required = position value ÷ leverage.
- Leverage multiplies your return on margin — gains and losses alike — not the dollar PnL of a given position.
- Watch effective leverage (positions ÷ equity), not just the slider.