What is leverage trading crypto

Leverage trading crypto means borrowing funds from an exchange to open a position bigger than your own account balance, using your deposit as collateral. It matters because it magnifies both gains and losses, so a small price move against you can wipe out your entire deposit fast. The follow-up question most people have: what happens when you lose? If the market moves past a set point, the exchange automatically closes your position through liquidation, keeping your remaining collateral as loss coverage.

For example, with 10x leverage and $100, you control a $1,000 position. A 10% price drop against you would erase the full $100, triggering liquidation, while a 10% gain would double your money. Most exchanges show your liquidation price before you confirm the trade.