Leverage and Liquidation

Leverage means trading a position bigger than the money you put down. The cash you commit is the margin; the leverage multiplier tells you how far it stretches. At 10x, a 1,000 USDT margin controls a 10,000 USDT position.

It sounds like free size, but nothing is free. Borrowed size means borrowed risk — the larger position moves against you just as fast as it moves for you.

Think of leverage as a magnifying glass. It enlarges whatever you point it at — both the wins and the losses, equally. At 10x, a 1% move in your favor feels like 10%. But a 1% move against you also stings like 10%, and a 10% move against you can wipe out your entire margin.

This is the part new traders underestimate. Higher leverage doesn't just raise your upside — it shrinks the distance between you and a total loss.

Every leveraged position has a liquidation price — the level where your losses have eaten through your margin. Reach it, and the exchange closes the position automatically to stop the loss going further. You don't choose to exit; it's forced.

Picture a casino table where your chips are the margin. As long as you have chips, you stay in the game. The moment they're gone, you're out — no negotiation. Higher leverage simply means you start with fewer chips between you and the door.

Liquidations matter beyond a single trader. When a market is heavily leveraged in one direction and price turns against it, forced closures can stack up — each liquidation pushing price further, triggering the next. That cascade is why sharp, sudden moves often come with a wave of liquidations.

A market loaded with leverage is a more fragile one — quicker to lurch in either direction. It's context for why moves can be violent, not a prediction of when. Read it alongside open interest and funding.