Leverage lets a trader control a position larger than the collateral posted for it, by borrowing the difference implicitly through the perpetual contract itself. Ten times leverage on a $1,000 margin post opens a $10,000 notional position; the collateral hasn't changed, but every dollar of price movement now has ten times the effect on that collateral. Understanding what that multiplication does to both potential outcomes is the entire subject of leverage.
Two numbers matter on every leveraged position: the collateral posted and the notional value it controls. Leverage is simply the ratio between them. A $2,000 margin post at 10x controls $20,000 of notional exposure; the same $2,000 at 2x controls $4,000. The profit or loss on the position is calculated against the notional value, which is exactly why leverage amplifies both directions. A 5% move against a 10x position wipes out half the margin; the same 5% move against a 2x position costs a tenth of it.
Every unit of leverage compresses the price move needed to trigger liquidation. At low leverage, a position can absorb a large adverse move before the collateral is exhausted; at high leverage, a much smaller move does the same. This relationship isn't linear intuition, it's mechanical: liquidation happens once losses consume the margin down to the maintenance threshold, and a higher notional-to-collateral ratio means each percentage point of price movement consumes proportionally more of that margin.
Leverage limits aren't a single account-wide number, they're set market by market based on the underlying asset's volatility and liquidity. On Canborsa, BTC and ETH cap at 25x, most large equities and commodities such as NVDA, TSLA and gold cap at 20x, and thinner, more volatile tokens can cap as low as 3x. The S&P 500 index sits at the top of the range, up to 30x, reflecting its comparatively low volatility relative to a single stock or token. The cap on any given market is a ceiling set by the venue.
Leverage changes exposure. Opening and closing any position costs a 0.14% round-trip fee (0.07% each way), calculated on notional value, so a larger leveraged position pays a proportionally larger fee in dollar terms even though the percentage stays fixed. While the position is open, it also accrues funding every hour, and Canborsa's benchmark for that ongoing carry is a fixed 10% annualized rate. On a $5,000 notional position held two weeks, that benchmark works out to roughly $19 in holding cost on top of the $7 round-trip fee, a real expense that scales with the notional size leverage creates, not with the smaller collateral actually posted.
The gap between a 3x cap and a 30x cap reflects how differently two assets can move in a single day. A broad index like the S&P 500 rarely moves more than a percent or two intraday, so a much larger multiplier is needed before a normal trading session threatens the maintenance margin. A thinly traded token can move that much in minutes, so the venue sets a far lower ceiling to keep the same kind of ordinary volatility from triggering forced liquidations across a large share of open positions. Reading the cap on a specific market is, in effect, reading the venue's own volatility assessment of that asset.
A trader posts $2,000 in collateral to open a $20,000 notional long at 10x on an asset with a 20x cap. The 0.14% round-trip fee on that notional is $28. If the position is held for one week and funding runs near Canborsa's 10% annualized benchmark, the holding cost adds roughly $38. Total cost of carry for the week, before any price movement: about $66, against $2,000 in margin at risk. That $66 has to be recovered before the position is profitable in net terms, a baseline every leveraged trade carries regardless of direction.
Compare the same trader choosing 2x instead of 10x for the identical $20,000 notional target. The margin requirement rises to $10,000, up from $2,000, but the cost of carry stays unchanged: the round-trip fee and the funding benchmark are both calculated on notional, independent of margin posted. What changes is the buffer against liquidation: with $10,000 behind the same $20,000 position, the price would need to move roughly five times further against the trade to reach the maintenance threshold than it would at 10x. Higher leverage doesn't make a position cheaper to run; it makes the same notional exposure achievable with less capital tied up, at the cost of a much narrower margin for error.
Leverage trading means controlling a notional position larger than the collateral posted for it. Ten times leverage on $1,000 of margin opens a $10,000 notional position, so every price move has ten times the effect on the margin compared to holding the same collateral unleveraged.
Leverage sets the ratio between margin posted and notional exposure controlled. It does not reduce risk or create additional capital, it multiplies the effect of price movement on the collateral already posted, in both directions.
Using leverage well below the maximum a market allows, sizing the position by the dollar risk at the stop-loss, and accounting for the ongoing funding cost of holding a leveraged position all reduce the chance of an avoidable liquidation.
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