Leverage in crypto refers to the use of borrowed funds to increase your exposure to a cryptocurrency trade beyond what your own capital would allow. It allows traders to control a larger position with a smaller amount of actual money (called margin).

🔧 How it Works:

Suppose you have $100 and use 10x leverage.

You can now open a position worth $1,000 (your $100 + $900 borrowed).

If the price moves in your favor by 10%, you gain $100 — 100% return on your initial $100.

But if the price moves against you by just 10%, you lose your entire $100, because the $900 isn't yours.

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⚠️ Key Points:

Margin: The money you provide as collateral.

Liquidation: If the price moves too far against your position, your trade will be automatically closed to prevent further losses.

Leverage Ratio: Expressed as 2x, 5x, 10x, up to 100x or more on some platforms.

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📈 Example:

If you're trading Bitcoin:

You go long (buy) BTC at $30,000 with 10x leverage using $1,000.

Position size: $10,000.

If BTC rises to $33,000 (10% increase), your profit = $1,000 (100% return on your capital).

If BTC falls to $27,000 (10% decrease), you're liquidated and lose your $1,000.

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✅ Pros:

Amplifies profits.

Allows larger trades with less capital.

❌ Cons:

Amplifies losses just as quickly.

High risk of liquidation.

Not suitable for beginners.