Leverage Trading

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Helping over 850,000 traders manage risk, trade smarter, and find platforms.

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High-impact concepts explained clearly and concisely.

What is Leverage Trading?

Leverage trading lets you amplify your market exposure by using borrowed capital, allowing you to trade larger positions with less upfront investment, a common strategy across crypto, forex, and stocks that can boost profits, but also magnifies potential losses.

Leverage trading involves using borrowed funds to increase your buying power across assets like crypto, forex, and stocks. To open a leveraged position, traders must provide a portion of the trade’s value as collateral, known as margin capital, which acts as the minimum investment required.

Leverage ratios vary by platform and asset class, often ranging from 2x to over 1000x. While higher leverage increases the potential return on each trade, it also dramatically raises the risk of liquidation if the market moves against your position.

On this website, we explain the full definition of leverage trading, how it works, when to use it, what the risks are, what it costs, and where it’s legal around the world.

A margin contract is the most profitable but also the riskiest contract you can trade. Day traders use leverage to generate thousands in profit daily — with strict risk management.

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Practical strategies and risk frameworks for traders ready to level up.

How Much Can You Make With Leverage?

Curious how much you could earn — or lose — with leverage? Here’s how position size and profit scale with different leverage levels.

Scenario 1
Account: $1000
Leverage: 25x
Market Gain: 2%
Profit: $500
Scenario 2
Account: $1000
Leverage: 25x
Market Gain: 12%
Profit: $3000
Open Leverage Calculator →
LEVERAGE EXPLAINED

What Does Leverage Trading Mean?

Leverage trading gives you access to larger trade sizes than your account balance by using borrowed capital. This technique is common in crypto, forex, and stock markets — especially among traders aiming to maximize profits from small accounts.

For instance, with 1:10 leverage, a $100 deposit controls a $1,000 position. That extra buying power can produce outsized returns, but it also means losses can accumulate much faster when trades go against you.

Leverage ratios vary depending on the broker, asset, and regulatory environment. Some platforms offer up to 1:5000 leverage, but higher multipliers come with much greater liquidation risk.

While brokers may advertise leverage ratios up to 1000x, most experienced traders rarely go beyond 10x–20x, not because of lack of access, but because higher multipliers drastically reduce the margin for error and increase the chance of total account wipeout from small market moves.

How Does Leverage Trading Work?

Step 1
Choose Your Leverage
Pick a leverage ratio based on your risk appetite and strategy — from 2x to 1000x or more.
Step 2
Open a Position
Use margin capital to open a larger trade than your balance would normally allow.
Step 3
Manage Your Risk
Set stop-losses and track your liquidation level to stay protected from large swings.
Step 4
Monitor Margin
Your broker/platform tracks your margin in real time and may issue margin calls if needed.
Step 5
Exit or Liquidation
If your margin drops too low, the broker may automatically close your position to limit losses.
10x
50x
200x
Risk Level Increases With Leverage

Leverage Ratios Explained

The leverage ratio shows how much of your position is borrowed capital versus your own margin. A 10x ratio means you control 10x your investment — 1 part margin, 9 parts loan.

Leverage

The amount of borrowed funds your broker lends you to increase your buying power. Leverage allows you to open larger positions with less capital — for example, 10x leverage turns $100 into $1,000 of exposure. But the higher the leverage, the smaller the price move it takes to liquidate your account. Most risk-managed traders stay between 2x and 5x, especially in volatile crypto markets.

Margin

Your own money used as collateral. It’s what you risk in the trade — and can lose if the market turns. Margin requirements vary by platform, but 10x leverage means you must keep at least 10% of the trade value in your account. If your margin level drops too low, you’ll face a margin call or forced liquidation. Always set a stop-loss to protect your margin from sudden market moves.

Account Size10x / 1:1025x / 1:2550x / 1:5075x / 1:75
$100$1,000$2,500$5,000$7,500
$500$5,000$12,500$25,000$37,500
$1,500$15,000$37,500$75,000$112,500
$5,000$50,000$125,000$250,000$375,000
$10,000$100,000$250,000$500,000$750,000

Multiply your account balance by the leverage ratio to calculate your position size.

Main Risks of Leverage Trading

Before using borrowed funds, it’s critical to understand the potential downsides of trading with leverage — from liquidation to overexposure and emotional risk-taking.

Unlimited Losses
If your broker doesn’t offer protections like stop-losses or negative balance protection, you could lose more than your initial deposit. See how leverage impacts losses →
Margin Risks
A 2% move against your 50x leveraged trade can erase your margin. Know how margin requirements affect your risk. Understand margin requirements →
Margin Call
When your account gets too close to zero, a margin call may force you to act. Learn how to spot it and what to do. Avoid margin calls with smart planning →
High Volatility
In markets like crypto, extreme volatility combined with leverage can lead to rapid liquidations. Master your liquidation levels →
Overleveraging
Using too much capital per trade often backfires. Learn how much is too much and how to stay disciplined. Avoid overleveraging mistakes →
Liquidation
If the market moves against you after a margin call, your entire position can be closed and capital lost. Control your liquidation price →