Leverage

Leverage is expressed as a multiple of your posted margin — 10x leverage means a position ten times the size of the capital you put up. The borrowed portion has to be maintained above a minimum collateral level, or the position gets liquidated.

For example, $1,000 of margin at 10x leverage controls a $10,000 position. A 5% adverse price move against that position costs $500 — 50% of the original $1,000 margin — instead of the $50 (5%) it would cost on an unleveraged $1,000 position.

A common mistake is using high leverage simply because an exchange offers it, without recalculating position size downward to keep the actual dollar risk the same as an unleveraged trade would have.