Lesson 2 of 6 10 min read
Leverage without blowing up
What leverage really changes — and what it doesn't.
Leverage changes margin, not risk
If you size from your stop, leverage only reduces the collateral you post. Your risk is set by size and stop, not the leverage number.
Liquidation price
High leverage puts liquidation close to entry. Your stop must always sit well before liquidation, or the exchange closes you first.
The real danger
Leverage makes oversizing easy. Most blow-ups come from risking far too much on one idea, not from leverage itself.
Key takeaways
- Stop and size determine risk, not leverage.
- Stop must be far from liquidation.
- Oversizing is the killer.
Exercise
For a planned trade, compute the liquidation price at 3x, 10x and 25x. Where does your stop sit relative to each?
Educational content only, not financial advice. Crypto is volatile and you can lose money.