Leverage does not make a bad trade good. It makes every trade bigger — the winners and the losers equally. Most people who lose an account to leverage did not get unlucky. They used a setting they did not understand.
The number nobody checks
Ask around and most people will tell you a 10x long gets wiped out by a 10% move against them. That is the wrong number, and it is wrong in the direction that costs money.
At 10x, your own money is 10% of the position. The other 90% belongs to the venue. The venue does not wait politely until its own money is at risk — it closes you while there is still margin left to cover fees and slippage. That cushion is the maintenance margin, and on most venues it is a fraction of a percent.
So the move that ends a 10x long is closer to 9.5%, not 10%. Half a percent sounds like nothing. It is the half percent between a stop that did its job and an account that is gone.
The formula, once
liquidation = entry x (1 - 1/leverage + maintenance margin)
10x long, entry $100, maintenance 0.5%:
= 100 x (1 - 0.10 + 0.005)
= $90.50 <- a 9.5% move, not 10%Run it across the settings people actually use and the picture gets uncomfortable fast:
| Leverage | Liquidation (entry $100) | Move that ends it |
|---|---|---|
| 2x | $50.50 | about 49.5% |
| 5x | $80.50 | about 19.5% |
| 10x | $90.50 | about 9.5% |
| 20x | $95.50 | about 4.5% |
| 50x | $98.50 | about 1.5% |
| 100x | $99.50 | about 0.5% |
At 50x, an ordinary intraday wick ends the position. Not a crash, not news — normal noise. That is the whole story of most blown accounts, and it is arithmetic, not bad luck.
Maintenance margin differs by venue, by asset and by position size, and it usually gets worse as the position gets bigger. Treat 0.5% as an illustration, and read the number your own venue shows you.
The two numbers people mix up
A stop is your decision. Liquidation is the venue’s. Never use one as the other.
360 Leverage Academy
- A stop loss is where you decided the idea was wrong. You choose it, before you enter, and you can be wrong about it cheaply.
- Liquidation is where the venue takes the position away from you to protect itself. You do not choose it, you do not negotiate it, and you usually pay a fee on the way out.
If your stop sits below your liquidation price, you do not have a stop. You have a hope. The venue gets there first every time.
What to do instead
- Decide the money first. Pick the loss you can take on this trade in currency, before you look at leverage at all.
- Let the stop set the size. Size comes from the distance between entry and the price that proves you wrong, not from what the leverage slider will let you get away with.
- Read the liquidation price on the ticket. Every venue shows it before you confirm. If it is anywhere near a level price has touched in the last week, the size is too big.
Leverage is not the enemy and it is not a cheat code. It is a setting, and the only people it treats well are the ones who worked out what it does before they used it.
The free 360 Leverage Academy walks through this with a live liquidation calculator and a position sizer you can push around until the numbers click. No signup, about fifteen minutes.
Education only. This is not financial advice and 360Trader is not a broker or an investment adviser. Nothing here is a recommendation to buy or sell anything. Trading involves risk, including the loss of your whole position.