Leverage
markets · derivatives
Borrowed or synthetic exposure that increases position size, amplifying both gains and losses.
- Also known as
- margin, leverage trading
Leverage lets traders control a position larger than their posted collateral, usually through margin loans, futures, perpetual swaps, or other derivatives. It magnifies percentage returns in both directions.
Leverage increases liquidation risk, funding costs, emotional pressure, and sensitivity to exchange rules. Forced liquidations can cascade during volatile markets.
Related terms
Futures
→Futures are derivatives for long or short exposure to an asset; crypto markets commonly use perpetual futures with no expiry.
trading · derivatives
Funding Rate
→A funding rate is the periodic payment between long and short perpetual futures positions that helps anchor price to spot.
trading · derivatives
Liquidation
→The forced closure of a leveraged position when collateral falls below required margin.
markets · derivatives