Leverage

Leverage lets a trader control a position larger than their own capital by borrowing from the exchange or a margin pool, expressed as a multiple such as 5x or 20x. The trader posts collateral, known as margin, and the borrowed portion magnifies the result of every price move in both directions: at 10x leverage, a 5% move against the position wipes out half the margin, and a move of roughly 10% can trigger liquidation. Fees, funding costs and slippage make the effective threshold tighter still. Leverage does not improve the odds of a trade; it compresses the time and price distance in which a position can be lost entirely.