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What Is Leverage in Crypto Trading?
Leverage lets you control a larger position with less capital. Learn how it works and why it is risky.
How leverage works
Leverage lets you open a position larger than your own capital by borrowing the difference. With 10x leverage, 100 USDT of margin controls a 1,000 USDT position.
Gains and losses are magnified
A 5% price move on a 10x position changes your margin by about 50%. That works in your favour when you are right and against you when you are wrong.
Liquidation
If losses use up most of your margin, the exchange closes the position to prevent further loss. This is called liquidation, and you can lose all the margin in that position. Higher leverage places the liquidation price closer to your entry.
Using leverage more safely
Use low leverage, size positions small, set stop-loss orders, and never add margin to a losing trade out of hope. Many beginners are better off avoiding leverage entirely until they have practiced.
Ready to practice? Create a free Dutch Trade account to explore crypto markets.
Educational content only, not financial advice. Crypto assets carry a high risk of loss.
Keep learning
Look up unfamiliar words in the crypto glossary or browse coin markets.