Cryptathon. Get the app
BTC falls 2%. What is left of your 100 USDT?−21x100 USDT position98 left−2010x1,000 USDT position80 leftLiquidation50x5,000 USDT positionLiquidated near −1.5%
BTC falls 2%.What is left of your 100 USDT?−21x100 USDTposition98 left−2010x1,000 USDTposition80 leftLiquidation50x5,000 USDTpositionLiquidatednear −1.5%

One move, three leverages. Same 2%, very different ends.

Leverage

Leverage makes the same price move count more on your margin, for gains and for losses.

Lesson 3 of 85 min4 parts

Updated . Cryptathon rules checked on .

Leverage sets how many times bigger your position is than your margin. At 10x, 100 USDT of margin opens a 1,000 USDT position, so a 2% move makes or loses 20 USDT, which is 20% of your margin. Higher leverage leaves less room before liquidation: about 9.5% at 10x, 4.5% at 20x and 1.5% at 50x.

By the end, you can

  1. 1Work out the position size from your margin and leverage
  2. 2Work out the profit or loss of a leveraged trade
  3. 3Say how far the price can move before liquidation
  4. 4Work out the fees on a leveraged trade

1 of 4

How does leverage change your profit?

Leverage lets you open a position bigger than the money you put in. At 10x, 100 USDT of margin opens a 1,000 USDT position, so every price move counts ten times as much on your margin.

The price move is the same for everyone. What leverage changes is how much of the market you hold when it moves.

Worked example

Profit at 10x

You put 100 USDT of margin on a BTC long at 10x. BTC rises 2%. What is your profit?

  1. 1
    Find the position sizeMargin times leverage.
    100 × 10 = 1,000 USDT
  2. 2
    Apply the move to the whole positionThe move counts on all 1,000 USDT, not only on your 100.
    1,000 × 2% = 20 USDT
  3. 3
    Compare it with your marginA 2% move became a 20% gain on your margin.
    20 ÷ 100 = 20%

Answer20 USDT, which is 20% of your margin. At 1x the same trade makes 2 USDT.

BTC rises 2% on 100 USDT of margin100 margin+2 USDT1xposition 100 USDT100 margin+20 USDT10xposition 1,000 USDT
BTC rises 2%on 100 USDT of margin100 margin+2 USDT1xposition 100 USDT100 margin+20 USDT10xposition 1,000 USDT
Figure 1 The same 2% rise on 100 USDT of margin. At 1x the position is 100 USDT and makes 2 USDT. At 10x it is 1,000 USDT and makes 20 USDT.
Your turn You put 50 USDT of margin on an ETH long at 20x. ETH rises 3%. What is your profit?
  1. 1.50 USDT

    That is 3% of your margin. The move counts on the whole position, which is 50 × 20 = 1,000 USDT.

  2. 30 USDT

    Right. The position is 50 × 20 = 1,000 USDT, and 1,000 × 3% = 30 USDT.

  3. 60 USDT

    Check the position size again: 50 × 20 is 1,000 USDT, and 3% of that is 30.

  4. 3 USDT

    That is 3% of 100. Start from the position size, 1,000 USDT.

Show the answer

B: 30 USDT. The position is 50 × 20 = 1,000 USDT, and 1,000 × 3% = 30 USDT.

2 of 4

Does leverage make losses bigger too?

Leverage does not know which way the price will go. The same 10x that turned a 2% rise into 20 USDT turns a 2% fall into a 20 USDT loss.

Worked example

Loss at 10x

Same trade: 100 USDT of margin on a BTC long at 10x. This time BTC falls 2%. What happens?

  1. 1
    Use the position value at entryLeverage was set when you opened.
    100 × 10 = 1,000 USDT
  2. 2
    Apply the moveThis time it is a loss.
    1,000 × 2% = 20 USDT
  3. 3
    Compare it with your marginA fifth of your margin is gone.
    20 ÷ 100 = 20%

AnswerYou lose 20 USDT, and your margin is now worth 80 USDT. Your loss shows in your PnL at once, even before you close.

BTC moveYour PnL at 10x, USDT+4%+40+2%+200%0−2%−20−4%−40Entry+2% = +20 USDT−2% = −20 USDT
BTC moveYour PnL at 10x, USDT+4%+40 +2%+20 0%0 −2%−20 −4%−40 Entry+2% = +20 USDT−2% = −20 USDT
Figure 2 One chart, two scales. Left: how far BTC moves. Right: what that is for a 10x long. Each 1% is 10 USDT, up or down.

A short works the same way, with the signs turned round: it gains when the price falls and loses when it rises.

Your turn You put 200 USDT of margin on a SOL short at 5x. SOL rises 4%. What is your PnL?
  1. A gain of 40 USDT

    A short gains when the price falls. SOL rose, so this short loses.

  2. A loss of 40 USDT

    Right. The position is 200 × 5 = 1,000 USDT, and 1,000 × 4% = 40 USDT against you.

  3. A loss of 8 USDT

    That is 4% of your margin. The move counts on the 1,000 USDT position.

  4. Nothing until you close

    PnL moves with the price while the position is open.

Show the answer

B: A loss of 40 USDT. The position is 200 × 5 = 1,000 USDT, and 1,000 × 4% = 40 USDT against you.

3 of 4

How far can the price move before liquidation?

On Cryptathon each position has its own margin (isolated margin). If losses use up your margin down to the maintenance margin, 0.5% of the position, the exchange closes the position for you. That is liquidation.

So the room your trade has is about one divided by the leverage, minus that last 0.5%.

Worked example

How far can BTC fall at 10x?

You hold a BTC long at 10x. About how far can BTC fall before the position is liquidated?

  1. 1
    Find the share of the position your margin coversYour margin is a tenth of the position.
    1 ÷ 10 = 0.1
  2. 2
    Keep back the maintenance marginThe last 0.5% of the position must stay in the margin.
    0.1 − 0.5% = 0.095
  3. 3
    Read it as a price moveSo the room is about 9.5%.
    0.095 × 100 = 9.5

AnswerAbout 9.5%. Maintenance margin changes with the mark price, so the exact liquidation price is a little different. Treat it as a rule of thumb.

The same rule at other leverage:

  • 2x: about 49.5%
  • 10x: about 9.5%
  • 20x: about 4.5%
  • 50x: about 1.5%
BTC move from your entry0%−2%−4%−6%−8%−10%Entry50x50x liquidated ≈ −1.5%20x20x liquidated ≈ −4.5%10x10x liquidated ≈ −9.5%
BTC move from your entry0% −2% −4% −6% −8% −10% Entry50x50x liquidated≈ −1.5%20x20x liquidated≈ −4.5%10x10x liquidated≈ −9.5%
Figure 3 Where a long would be liquidated, measured down from the entry price: about 1.5% at 50x, 4.5% at 20x and 9.5% at 10x.
Your turn You open a long at 20x. About how far can the price fall before liquidation?
  1. 20%

    That would be right at 5x. At 20x your margin covers 1 ÷ 20 = 5% of the position.

  2. 5%

    You have the right start, 1 ÷ 20 = 5%, but the last 0.5% must stay as maintenance margin.

  3. 4.5%

    Right. 1 ÷ 20 = 5%, minus the 0.5% maintenance margin, is about 4.5%.

  4. 0.5%

    That is the maintenance margin itself. The room is 5% minus 0.5%.

Show the answer

C: 4.5%. 1 ÷ 20 = 5%, minus the 0.5% maintenance margin, is about 4.5%.

Try it

Put 100 USDT of margin on BTC. Pick the leverage and the side, then drag the price. Watch the position size, your PnL, the room before liquidation and the fees.

4 of 4

How does leverage change the fees?

Trading fees are a share of the position size, not of your margin. On Cryptathon a taker order, such as a market order, pays 0.05%. A maker order, a limit order that waits in the book, pays 0.02%.

Worked example

Fees on a 10x trade

You open and later close a 10x long on 100 USDT of margin, both with market orders. You close at the same price you opened. What do you pay in fees?

  1. 1
    Find the position sizeFees are charged on this.
    100 × 10 = 1,000 USDT
  2. 2
    Fee to openA market order is a taker order.
    1,000 × 0.05% = 0.50 USDT
  3. 3
    Add the open and close feesSame price, so the close fee is the same.
    0.50 + 0.50 = 1 USDT
  4. 4
    Compare it with your marginThe fees are the same as 1% of your margin.
    1 ÷ 100 = 1%

Answer1 USDT, the same as 1% of your margin. It comes from your free balance, on top of the margin. At 1x the same trade would pay 0.10 USDT.

1x100 USDT positionopen 0.05close 0.05= 0.10 USDT in fees10x1,000 USDT positionopen 0.50close 0.50= 1 USDT in feesSame price in and out. Taker fee 0.05% each way.
1x100 USDT positionopen 0.05close 0.05= 0.10 USDT in fees10x1,000 USDT positionopen 0.50close 0.50= 1 USDT in feesSame price in and out.Taker fee 0.05% each way.
Figure 4 Opening and closing at the same price with market orders on 100 USDT of margin: the fees are 0.10 USDT at 1x and 1 USDT at 10x.
Your turn You use 50 USDT of margin at 20x and open with a limit order that waits in the book. What is the fee to open?
  1. 0.01 USDT

    That is the maker fee on your 50 USDT margin. Fees are charged on the position, 1,000 USDT.

  2. 0.20 USDT

    Right. 50 × 20 = 1,000 USDT, and 1,000 × 0.02% = 0.20 USDT.

  3. 0.50 USDT

    That is the taker fee. An order that waits in the book pays the maker fee.

  4. 2 USDT

    Check the rate: the maker fee is 0.02%, which is 0.0002, not 0.2%.

Show the answer

B: 0.20 USDT. 50 × 20 = 1,000 USDT, and 1,000 × 0.02% = 0.20 USDT.

Common questions

Is a 1x perpetual the same as buying the coin?

Almost. A 1x long moves like the coin: a 5% rise on a 100 USDT long gives 5 USDT of PnL before costs. But you hold a contract, not the coin, and you pay or receive funding. Maintenance margin follows the position's current value, so a 1x long is not liquidated by a price fall alone.

Does leverage change the price move you need to break even?

No, but it changes what the fees are on your margin. With market orders you pay 0.05% to open and 0.05% to close, so the price must move about 0.1% in your favour to cover the fees at any leverage. On 100 USDT of margin at 10x, that 0.1% of a 1,000 USDT position is 1 USDT, which is 1% of your margin.

Does leverage make funding payments bigger?

Yes, compared with your margin. Funding is a share of the position value, and leverage makes the position bigger. With 100 USDT of margin and a +0.01% rate, a 1x long pays 0.01 USDT at each funding time, and a 10x long pays 1,000 × 0.01% = 0.10 USDT. The rate is the same; the position is ten times as big.

Check yourself

Three questions on the whole lesson.

Question 1 of 3 You put 40 USDT of margin on a BTC long at 25x. BTC rises 1%. What is your profit?
  1. 0.40 USDT

    That is 1% of your margin. The position is 40 × 25 = 1,000 USDT.

  2. 10 USDT

    Right. 40 × 25 = 1,000 USDT, and 1% of that is 10 USDT.

  3. 25 USDT

    That is the leverage, not the profit. Work out the position size, then 1% of it.

  4. 1 USDT

    That is 1% of 100. Start from the position size, 1,000 USDT.

Show the answer

B: 10 USDT. 40 × 25 = 1,000 USDT, and 1% of that is 10 USDT.

Question 2 of 3 Three BTC longs open at the same price, at 2x, 10x and 50x. The mark price then falls 3% from their entry. Which one reaches its liquidation price?
  1. The 2x long

    At 2x the room is about 49.5%. A 3% fall is far from it.

  2. The 10x long

    At 10x the room is about 9.5%. A 3% fall leaves it open.

  3. The 50x long

    Right. At 50x the room is about 1.5%, so a 3% fall goes past it.

  4. None of them

    The 50x long has only about 1.5% of room.

Show the answer

C: The 50x long. At 50x the room is about 1.5%, so a 3% fall goes past it.

Question 3 of 3 You keep the same margin and change from 10x to 20x. What happens to the fee you pay on each trade?
  1. It doubles

    Right. The position size doubles, and the fee is a share of the position size.

  2. It stays the same

    The fee is a share of the position size, and the position is now twice as big.

  3. It halves

    Higher leverage means a bigger position, so the fee goes up, not down.

  4. There is no fee at higher leverage

    Every trade pays a fee on the position size.

Show the answer

A: It doubles. The position size doubles, and the fee is a share of the position size.

What to remember

  1. How does leverage change your profit?Position size is margin times leverage, and the price move counts on the whole position.
  2. Does leverage make losses bigger too?Leverage grows losses exactly as much as gains.
  3. How far can the price move before liquidation?The room to move is about 1 ÷ leverage minus 0.5%, so higher leverage means less room.
  4. How does leverage change the fees?Fees are a share of the position, so leverage grows them too.

Short version: read the blog post.

Next lessonMargin