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Leverage and margin

Ce guide est pour l’instant disponible en anglais. Les traductions suivront.

Leverage lets a trader open a position that is larger than the cash (or crypto) posted as collateral. The venue or broker lends exposure; the trader posts margin. Gains and losses are calculated on the notional size of the position, not only on the margin. That is the entire point, and the entire risk.

This guide explains the vocabulary and the arithmetic in general terms. Platforms differ. Nothing here is an offer of leverage, a recommendation to use it, or financial advice.

Notional, margin, and the multiple

Suppose a contract is quoted at $50,000 and you want $10,000 of notional exposure (a fraction of one coin, or a small futures position). Without leverage you would post about $10,000 plus fees. With five times leverage you would post about $2,000 of initial margin, other things equal. A 2% move in the contract is $200 on that $10,000 notional — 10% of the $2,000 margin, not 2% of it.

The multiple cuts both ways. The same 2% move against you is also 10% of the posted margin. A 20% adverse move would be $2,000, wiping out that isolated margin before costs. In practice liquidation usually arrives earlier, because the venue requires a maintenance buffer. See Liquidations explained.

A common confusion is to think of leverage as “free capital.” It is not. It is a loan of exposure. Interest may appear as a funding rate, a borrow fee, or a financing charge, depending on the product. Even when the headline leverage is “available,” the venue can change margin rates, cut leverage in volatile sessions, or reject new risk.

Isolated versus cross, again

Isolated margin caps (in principle) how much of your balance is assigned to one trade. You choose a pocket of collateral. If the trade goes badly, that pocket can be liquidated. Cross margin uses a shared pool. It can prevent a small move from liquidating a tight isolated position, because other equity stands behind it; it can also allow one large loss to consume equity that you thought of as belonging to other trades or to “dry powder.”

Some platforms also offer portfolio or multi-asset margin, with haircuts and correlations determined by the venue. Those models are more complex and can change without much notice. The conservative habit is to assume that posted collateral can be used to cover losses according to the current rulebook, not according to a mental model of “this pile is safe.”

Why the mark price matters

Spot last-trade prices and derivatives mark prices are not always the same. Many venues liquidate against a mark or index, sometimes a basket of spot prices plus a basis, to make it harder for a single print on their own book to hunt margin. Sometimes, in stress, the mark and the book still diverge, or the index itself gaps.

If you compare your “unrealized PnL” to a coin’s price on a different website, you can be looking at two different numbers. For margin, the venue’s number is the one that counts.

Funding, borrow, and time

Leverage is often discussed as if it were only a multiple. Time also matters:

• Perpetual swaps usually have a funding rate exchanged between longs and shorts on a schedule (every one, four, or eight hours is common). A position that is “right” on direction can still shrink if you pay a high funding rate for long enough.
• Dated futures embed a basis instead of a continuous funding payment.
• Margin loans on spot may charge an explicit borrow rate.

Short-horizon traders sometimes ignore these because a five-minute hold may accrue a negligible funding slice. The slice is not always negligible around extreme funding prints, and it is not negligible if a “scalp” becomes an overnight hold by accident.

What leverage does not do

Leverage does not improve the quality of an idea. It does not tighten a spread, reduce fees as a share of the notional, or make a forecast more accurate. It changes how much of your equity moves when the price moves, and how close you sit to a forced exit.

High headline leverage (50x, 100x, or more on some crypto contracts) leaves almost no room for an ordinary swing. A 1% move against a 100x isolated position is a full loss of that margin in the cartoon arithmetic, and the real engine will usually act sooner. These products exist; their existence is not evidence that they are suitable.

Questions worth answering before using it

If you are studying leveraged products, the useful questions are mechanical, not promotional:

• What is the maintenance-margin schedule at the size I would trade?
• Isolated or cross, and what else shares that collateral?
• Which price is used for margin and for liquidation?
• What fees, funding, or borrow accrue, and when?
• What happens if the app, the API, or the venue goes down mid-move?
• How would a loss of that size affect money I cannot afford to lose?

Risk management and stop-loss strategies are companion pieces to this one. Position size, not the maximum leverage a banner advertises, is the number that usually decides whether a normal market wiggle is survivable.

This article is for information only and is not financial, investment, or trading advice. Leveraged products can lead to the rapid loss of all capital, and in some cases of more than the margin on deposit.