Leverage multiplies your exposure, not your balance. Here's what that means for your trades, your PnL, and your liquidation price.

What This Guide Covers

  • What leverage does and doesn't do
  • How your PnL is calculated with leverage
  • How leverage affects your liquidation price
  • How to choose the right leverage on LeverUp

Before You Start

What Leverage Actually Does

When you open a leveraged position, you're using a small amount of collateral to control a much larger position.

The formula is simple:

Notional Position Size = Margin × Leverage

Example: $100 USDC at 10x leverage = $1,000 notional position

Your profits and losses are calculated on the notional size, not your margin. That's what makes leverage powerful — and what makes it dangerous.

A Worked Example

Let's say you open a Long BTC/USD position:

Value
Margin (collateral) $100 USDC
Leverage 10x
Notional position $1,000
BTC entry price $85,000

If BTC rises 5%:

  • Your position gains $1,000 × 5% = $50
  • That's a 50% return on your $100 margin

If BTC falls 5%:

  • Your position loses $1,000 × 5% = $50
  • That's a 50% loss on your $100 margin

The price moved 5% — but your margin moved 50%. That's leverage at work.

📸 [IMAGE: Order panel showing $100 margin, 10x leverage selected, notional size displayed]

Leverage and Liquidation Price

The higher your leverage, the closer your liquidation price sits to your entry. On LeverUp, a position is liquidated when it has lost approximately 85% of its collateral value.

Here's what that means in practice for a long position:

Leverage Price move needed to trigger liquidation
5x ~17% against you
10x ~8.5% against you
20x ~4.25% against you
50x ~1.7% against you
100x ~0.85% against you

At 100x leverage, a move of less than 1% in the wrong direction liquidates your position. At 5x, you have nearly 17% of room.

📸 [IMAGE: Leverage slider with the liquidation price field updating as leverage changes]

How to Set Leverage on LeverUp

The leverage slider is in the order panel. LeverUp offers 2x to 1001x.

Preset options: 2x, 10x, 50x, 100x, 500x, 750x, 1001x — or drag the slider to any value in between.

For new traders: Start between 5x and 10x. This gives you enough exposure to feel the market while keeping your liquidation price far enough away to learn without being wiped out by normal volatility.

Important Things to Know

Leverage amplifies losses just as much as gains. There's no leverage that only works in your favor. At 10x, you make 50% on a 5% move — and you lose 50% on a 5% move in the other direction.

Your liquidation price is not static. Holding fees and funding rates accumulate over time and gradually reduce your effective collateral. This moves your liquidation price closer to your entry the longer you hold. Check it regularly on long-duration trades.

Notional size drives your fees. Opening fees and funding rates are calculated on your notional position size, not your margin. A $100 margin at 100x pays fees as if it were a $10,000 position.

Common Mistakes

Reaching for the maximum leverage. 1001x means a price move of less than 0.1% triggers liquidation. This isn't trading — it's gambling on near-zero margin. Start low and increase only when you understand how the platform behaves.

Not checking the liquidation price before confirming. Always look at the liquidation price in the order summary before you submit. If it's uncomfortably close to the current price, reduce your leverage.

Confusing leverage with position size. Leverage determines how much of the market you're exposed to per dollar of margin. It doesn't guarantee profitability — the market direction still has to be right.

Risk Reminder

Leverage is the mechanism that makes large gains possible with small capital — and the same mechanism that makes total loss of margin possible on small price moves. At 10x leverage, an 8.5% adverse move is enough to trigger liquidation. Know your numbers before you enter.