Leverage

Leverage raises exposure above your cash. Gains and losses scale by the factor. At 10x, $100 controls $1,000. A 10% move your way is 100%. A 10% move against you wipes the position. You get leverage from margin borrowing, perpetual futures with low margin, and DeFi loops that deposit, borrow, and redeposit. Each path has different funding, liquidation rules, and failure modes.

Leverage is capital efficient. It is also how most retail traders blow up, usually on liquidations in spikes. Fear of liquidation produces bad exits and doubled-down mistakes. Professionals size to a max loss, use stops, and pick leverage that matches asset volatility. More leverage is not better. Fitting leverage to the risk is better.

Leverage amplifies trading exposure beyond your actual capital, multiplying both potential gains and losses by the leverage factor. With 10x leverage, $100 controls $1,000 of position value: a 10% move in your favor yields 100% returns, but a 10% adverse move eliminates your entire position through liquidation. Each mechanism has different risk profiles, funding costs, and liquidation parameters.

Leverage greatly increases capital efficiency, you can take meaningful positions without committing large amounts of capital, but the risk amplification catches most retail traders. Studies consistently show the vast majority of leveraged retail traders lose money, primarily through liquidations during volatility spikes. 10x leverage means a 10% move against you can wipe the position.

Crypto perps make that number a UI setting.