Leverage and liquidation, with the arithmetic
Leverage lets you open a position larger than your margin. With isolated margin at 10x, a 1,000 USDT margin controls 10,000 USDT notional — and a price move of roughly 10% against you, less the maintenance margin and fees, wipes out the margin. The exchange then liquidates the position.
Rough rule
Distance to liquidation ≈ 1 ÷ leverage, minus the maintenance margin rate. At 20x that is under 5%; at 50x under 2%. Bitcoin regularly moves more than that in a day.
Costs grow with leverage
Fees and funding are charged on notional, so a 10x position pays ten times the fee of a 1x position with the same margin.
Our tools page has a liquidation calculator. Use it before you open a position, not after.
Education only — not investment, tax or legal advice.
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Not investment advice. Nothing here is a recommendation to trade, to use leverage, or to use any particular exchange. Trading crypto derivatives can lose you more than you deposit. We are paid a commission by exchanges on the fees you generate, so we earn more when you trade more — read everything here with that in mind.