Why High Leverage Is So Risky in Crypto
Leverage lets you control a large position with a small amount of capital. It increases returns but compresses your margin for error. In crypto, a small move can trigger liquidation when leverage is too high.
Leverage magnifies every mistake
A 1% move against a 50x position is a 50% loss on your margin. High leverage trades feel stressful and are hard to manage. Tight stops increase the chance of getting stopped by normal volatility.
Liquidation risk increases fast
Every exchange has a maintenance margin requirement. As leverage rises, the distance to liquidation shrinks. One wick can end the trade before your setup works.
A safer leverage mindset
- Choose leverage after you set your Stop Loss, not before.
- Use lower leverage on volatile alt coins.
- Keep risk per trade fixed regardless of leverage.
Leverage vs liquidation distance
2x → ~48% room | 5x → ~19% room | 10x → ~9.5% room | 25x → ~3.5% room | 50x → ~1.5% room | 100x → ~0.5% room
These are approximate distances for isolated margin with 0.5% maintenance margin rate. Actual distances vary by exchange.
Leverage is a tool, not a requirement. If you size correctly, you can trade with low leverage and still hit risk targets. The calculator helps you keep risk steady across leverage settings.
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