Leverage in cryptocurrency futures can be a powerful tool... or a deadly trap. Using it correctly can multiply your profits; using it incorrectly can drain your account in seconds. Today, I will explain how to use leverage without getting liquidated, step by step and without unnecessary jargon.
First, what is leverage?
Leverage allows you to open larger positions with less capital.
For example, with 10x leverage, you can open a position of $1,000 with just $100.
But be careful: if the price moves just -10% against you, you can be liquidated and lose your entire investment.
## 🛑 What is liquidation?
Liquidation occurs when your margin no longer covers the losses of your leveraged position. At that moment, Binance automatically closes your trade to prevent your account from going negative.
## ✅ How to avoid liquidation
1. 📉 Use low leverage (less is more)
Start with 2x or 3x. It's safer and gives you more margin before being liquidated.
2. 🧮 Calculate your liquidation point before opening the trade
You can use the Binance Futures calculator to know at what price you would be liquidated.
3. 🛑 Set a realistic stop loss
Don't wait for the exchange to liquidate you. You should close the trade much earlier.
But... how much is an acceptable stop loss? Here it is:
## 📊 What percentage is ideal for the stop loss?
There is no fixed number, but the professional rule is:
🎯 Risk only between 1% and 3% of your total capital per trade.
Example:
You have an account with 1,000 USDT.
You want to risk only 2%, that is, 20 USDT per trade.
If you use 5x leverage, you are controlling a position of 5,000 USDT.
Then, your stop loss should be placed so that you do not lose more than those 20 USDT, which may represent just a 0.4% movement against you.
#### 📐 Quick formula:
Maximum loss = Total capital × % risk
Stop loss (%) = (Maximum loss ÷ Total position size) × 100
✅ With high leverage (10x+), set the stop loss tighter: between 0.5% and 1% of the price movement.
✅ With low leverage (2x–3x), you can allow a wider margin (up to 2%-3%).
4. 💰 Do not use all your capital in a single trade
Divide your capital. Use only 5% to 10% of the total per position. This way you survive the bad streaks.
🧠 Tip: Do not set the stop loss right at obvious levels like immediate supports or resistances. That’s where stop hunts (liquidity sweeps) often occur.
5. Watch the Funding Rate and Open Interest
These metrics show the market sentiment. If you see very high funding rates or inflated Open Interest, consider reducing your exposure.
😌 Avoid trading under pressure or emotion
Leverage amplifies your emotions as much as your results. If you feel nervous or anxious, reduce the size of your trade.
Do you have questions or want us to analyze a real trade?
Leave it in the comments! 👇