Leverage & Margin

Leverage is not a multiplier on your wins. It is a divisor on your survivable move.

The math, once. Margin × leverage = notional. Put up 100 with 10x and you control 1,000 of exposure. A 1% move in your favor returns 10 on your 100 — a 10% gain. The same 1% against you is a 10% loss. Nothing about leverage changes the market; it changes how much of the move you absorb per unit of margin.

Distance to zero

The honest way to read leverage is as the move that wipes the margin:

| Leverage | Move against you that erases margin |

|----------|-------------------------------------|

| 2x | ~50% |

| 5x | ~20% |

| 10x | ~10% |

| 25x | ~4% |

| 50x | ~2% |

BTC moves 2–4% on an ordinary day. At 50x, an ordinary day ends you. High leverage is not aggressive trading — it is a decision that normal volatility is allowed to kill the position. (Liquidation actually arrives before the full wipe — maintenance margin, lesson 4.)

Isolated vs cross

Isolated margin walls off a fixed amount per position; the worst case is losing that wall. Cross margin lets your whole account balance back every position — more efficient, and catastrophically social: one bad position can pull the entire account into its grave. Until you have a tested risk framework (M04), isolated is the adult default.

Sizing comes first

The desk rule you will meet again in M03: choose the dollar risk first, derive size and leverage from it. Leverage is an output of a sizing decision, never an input you brag about.