Leverage

Leverage in crypto trading allows users to borrow funds to amplify their position size, potentially increasing both gains and losses. It’s commonly expressed as a ratio, such as 5x or 10x.

How It Works

With leverage, traders can control a larger position than their actual capital allows. For instance, using 10x leverage on $100 enables a $1,000 trade. While this can magnify profits, it also significantly increases the risk of liquidation.

Risks and Rewards

Leverage is a powerful but risky tool. It can maximize returns in volatile markets, but a small price movement in the wrong direction can wipe out an entire position quickly.