Leverage Trading for Beginners
Leverage allows you to control a large position with a small amount of capital. It's a powerful tool that can amplify both profits and losses.
How Leverage Works
With 10x leverage, $100 controls a $1,000 position. If the price moves 1%, your profit/loss is 10%.
📈 If Price Goes Up 5%
- Without leverage: +$5 (5%)
- With 10x: +$50 (50%)
- With 25x: +$125 (125%)
📉 If Price Goes Down 5%
- Without leverage: -$5 (5%)
- With 10x: -$50 (50%)
- With 25x: -$125 (LIQUIDATED)
Leverage Levels Explained
| Leverage | Risk Level | Best For |
|---|---|---|
| 2-5x | Low | Swing trades, beginners |
| 5-10x | Medium | Day trades, experienced |
| 10-25x | High | Scalping, pros only |
| 25x+ | Extreme | Gambling (not recommended) |
The Truth About High Leverage
⚠️ Reality Check
100x leverage means a 1% move against you = 100% loss = complete liquidation. Even in "stable" markets, 1% swings happen constantly. High leverage is not a shortcut to wealth—it's a shortcut to zero.
5 Rules for Using Leverage Safely
- 1. Start with 3-5x maximum as a beginner
- 2. Always calculate liquidation price before entering
- 3. Use isolated margin to limit losses
- 4. Set stop loss BEFORE entering the trade
- 5. Never add to a losing position (no "averaging down")