Leverage
Borrowed capital that multiplies both gains and losses — extremely risky.
Leverage is the use of borrowed funds to increase the size of a position. On crypto exchanges like Binance, it's possible to trade with up to 125x leverage.
How it works:
•With $100 and 10x leverage you control $1,000 in value
•If price rises 10%, profit is $100 (100% on your stake)
•If price falls 10%, you lose your entire stake (liquidation)
Types of leverage:
•Cross margin — all account funds used as collateral
•Isolated margin — only defined amount exposed to risk
Funding rate: on perpetual futures, users of long and short positions pay each other a fee — depends on market sentiment.
WARNING: Statistics are clear — 80-90% of retail traders using leverage lose money. Never use leverage with an amount you can afford to lose.