What Is Leverage? Doubling the Multiple Halves the Distance to Liquidation
Guides · · Satoshi Note Editorial
Read in: 한국어
Leverage is usually introduced as a multiplier for gains. The same multiplier also shrinks how far the price can move against you.
At a glance
- Leverage is how many times your collateral you trade. The higher it is, the closer the liquidation price sits to your entry.
- Simplified, the price move you can absorb is roughly 100 ÷ leverage (%). 10x is about 10%, 50x about 2%.
- The table below ignores fees and maintenance margin. It is a made-up example, and real liquidation prices differ by exchange.
What leverage does
With $100 of margin at 10x, you can open a $1,000 position. A 1% rise adds $10 to the position, which is 10% of your $100. Gains and losses are both multiplied relative to your collateral.
The flip side: less room
On a long, a 10% drop wipes out nearly all of $100 at 10x. That is where liquidation happens. The higher the multiple, the faster the same price move eats the collateral.
A simplified table (hypothetical)
Long position, entry price $100,000, ignoring fees, maintenance margin and extra collateral.
| Leverage | Drop absorbed (approx.) | Liquidation price (approx.) |
|---|---|---|
| 2x | 50% | $50,000 |
| 5x | 20% | $80,000 |
| 10x | 10% | $90,000 |
| 20x | 5% | $95,000 |
| 50x | 2% | $98,000 |
| 100x | 1% | $99,000 |
For a short the direction flips: it is liquidated after the same size of rise.
Why real numbers differ
Exchanges require a minimum amount of collateral to remain (maintenance margin), and fees and funding fees apply. Real liquidation therefore often happens a little earlier than the table shows. Margin mode (cross or isolated), position size and the mark price also matter. For the exact value, look at the liquidation price your exchange displays.
How to read this distance in Satoshi Note
Satoshi Note shows each trader position's liquidation price and its percentage distance from the current price. Many positions with a small distance only means forced orders could appear after a modest move; it says nothing about which way the price goes. How liquidations reach the market as orders is in the liquidation beginner guide, the basics of futures in the futures vs spot guide, and terms in the glossary.
FAQ
Is lower leverage safe?
It gives more room for the same price move, but "safe" is too strong. Position size and extra collateral matter too.
Is all collateral lost when liquidated?
It depends on the exchange. Some keep what remains as a liquidation fee; others return part of it. Check your exchange's rules.
Isolated vs cross margin?
Isolated splits collateral per position so only that position is liquidated. Cross uses the whole account balance as collateral, which pushes liquidation farther away but exposes the entire account.
This is a concept explainer by the Satoshi Note editors and does not recommend any leverage or trade. The table is a simplified hypothetical; real values differ by exchange. As of 2026-11-09.