Leverage and margin

What leverage really is

The usual description — "trade a larger position with less money" — is true and misleading. The position size is your choice with or without leverage; what leverage sets is how far price can move against you before the exchange closes the position for you.

At 10x, roughly a 10% adverse move exhausts the margin. At 50x, roughly 2%. Read that as a stop distance, because that is what it is: a hard exit you did not place and cannot move once price is running.

Margin: isolated or cross

The choice decides what is at risk when a position goes wrong:

• Isolated — only the margin assigned to that position can be lost. The position dies alone, the rest of the account survives.
• Cross — the whole account balance backs the position. Liquidation comes much later, and when it comes it takes everything with it.
• Cross is not "safer" because the liquidation price is further away. It converts a bounded loss into an unbounded one.

Where the liquidation price comes from

The exchange requires a minimum maintenance margin to keep a position open. The liquidation price is simply where your margin, after the adverse move, falls to that minimum — so it depends on entry, leverage, position size and any margin you added.

Two details that surprise people: the level is computed from the mark price rather than the chart's last trade, and it moves if you add or remove margin. It is not a fixed property of your entry.

Why high leverage fails on noise

Most coins move several percent in an ordinary day without anything meaningful happening. At 50x, an ordinary day is enough to close you out — you are not being wrong about direction, you are being closed by noise on the way to being right.

This is why leverage should be chosen from the coin's daily range rather than from ambition: if a coin routinely swings 4%, a position whose liquidation sits 2% away is not a trade, it is a coin flip with a fee.

Common questions

Does higher leverage mean higher profit?

It raises profit and loss per unit of price move by the same factor, and it moves your liquidation closer. The expected outcome does not improve — the chance of being closed before the move happens does.

Isolated or cross — which should I use?

Isolated bounds the damage to one position, which is why it is the safer default. Cross delays liquidation by risking the whole balance, which is a different trade, not a safer one.

Can adding margin save a position?

It moves the liquidation price further away, which buys room — it does not make the position right. Adding margin to a losing position is the mechanism behind most accounts that go to zero in one move.