---
title: "What Is Leverage Trading? Complete Guide | EVEDEX"
description: "Learn what leverage trading is, how it works, and the risks involved. A clear, unbiased introduction to trading with leverage in crypto."
url: "https://evedex.com/en/what-is-leverage-trading/"
lang: "en"
---

# What Is Leverage Trading in Crypto?

Understand how leverage amplifies both your potential gains and losses when you trade digital assets.

[Learn More](https://exchange.evedex.com#login)

## Core Concepts Behind Leverage Trading

### Margin and Collateral

You deposit a fraction of the position size; the platform loans you the rest to amplify exposure.

### Amplified Gains and Losses

A 5% price move with 10x leverage becomes a 50% gain or loss on your collateral.

### Liquidation Risk

If the market moves against you past a threshold, your position closes automatically to protect the lender.

### Funding Rates

Perpetual contracts charge periodic fees to keep leveraged positions open, paid between long and short traders.

## How Does Leverage Trading Work in Practice?

A step-by-step look at opening, managing, and closing a leveraged position.

### Deposit Margin

You fund your account with collateral — typically USDT, BTC, or ETH — which acts as your margin.

## Common Questions

### What does leverage mean in trading?

Leverage lets you control a larger position than your account balance by borrowing funds from the exchange. If you use 10x leverage, every $1 you deposit controls $10 worth of crypto.

### Is crypto leverage trading risky?

Yes — leverage magnifies both profits and losses. A small adverse price move can liquidate your entire position. Many new traders lose money quickly because volatility in crypto is high.

### Can I lose more money than I deposit?

On most platforms, liquidation prevents your balance from going negative. However, in extreme conditions or with certain products, you may owe more than your initial margin.

### How do I choose the right leverage ratio?

Lower leverage (2x–5x) gives you more room for price swings and reduces liquidation risk. Higher ratios (20x–100x) are for experienced traders with tight stop-losses and risk management. On EVEDEX, the cap depends on the pair: up to 200x only on BTC-USD, ETH-USD and SOL-USD for positions up to $50,000 notional, 100x on XRP, gold, silver and WTI oil, and 75x or 50x on most other pairs.

### What is a liquidation price?

It's the price at which your position is automatically closed because your margin falls below the maintenance requirement. You can calculate it before opening a trade using your leverage and entry price.

## Ready to Explore Leverage Responsibly?

Start with low leverage, practice on a demo account, and never risk capital you can't afford to lose. Knowledge and discipline are your best tools.

[Open Demo Account](https://exchange.evedex.com#login)