Unit 1 · Level 4 · Leverage & Margin
Leverage: borrowed conviction
The advanced weapons. First up: LEVERAGE, trading with borrowed money. 10x leverage means a $1,000 deposit controls a $10,000 position. Every 1% move becomes 10% of YOUR money, both directions. Leverage doesn't create edge. It amplifies whatever you already are, mistakes included.
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What you get asked
With 10x leverage, the market moves 1% against you. What happened to your capital?
The multiplication is symmetric and merciless. A routine 10% adverse move at 10x = 100% of your margin. Gone.
The honest question before ANY leveraged trade: 'does normal daily volatility exceed my liquidation distance?' BTC can easily move 3-5% in a day. At 20x, your liquidation sits ~5% away. Verdict?
That's a countdown, not a trade. Match leverage to volatility: the position must survive ORDINARY noise, or you're betting on the market holding its breath for you.
Leverage amplifies returns, losses, fees, and ___ (the silent fourth passenger).
A 10x position turns every wiggle into adrenaline. The four demons from League 2 all get louder under leverage. That may be its most underrated cost.
The professional's actual use of leverage is surprisingly boring. It's for…
Pros size the RISK first (1% rule, always) and use leverage so less cash sits in the position. Same risk, freed capital. Amateurs invert it: same cash, multiplied risk. The formula stays king. 🐜
The rest of this unit
Amplification, liquidation, short selling, and why the 1% rule survives it all.