Leverage

Leverage is a multiplier on position size that lets a small amount of margin control a much larger position. 10x leverage means $100 of margin controls $1,000 of exposure. If the underlying moves 1% in your favor, the position gains 10% on your margin. If it moves 1% against you, the position loses 10% on your margin. Leverage magnifies both gains and losses by the same multiple, and brings the liquidation price closer to entry as the multiplier rises.

Why leverage exists

Leverage is a feature of margin-trading venues, not a strategy. Exchanges offer leverage because it lets traders capture larger price moves with less capital tied up, which makes the market more capital-efficient. The same mechanism that creates capital efficiency also creates accelerated risk: a leveraged position that moves 5% against you loses 5x as much (at 5x) or 20x as much (at 20x) of your posted margin as the underlying price move suggests.

How leverage interacts with stop placement

At low leverage (2x to 5x), a typical 2% stop distance gives you a stop that fires well before the liquidation price, which is the correct relationship. At high leverage (10x to 20x), the same 2% stop distance may sit very close to or beyond the liquidation price, which means the liquidation engine will close your position before your stop fires. The position sizer on Hex37 displays both the stop distance and the liquidation distance, and warns when the liquidation price has moved inside the stop. That warning is the cleanest signal that you have used too much leverage for the trade you are trying to make.

What leverage looks like on Hex37

Every perpetual contract on Hex37 supports up to 20x leverage. The trade workspace lets you select leverage before placing the entry. Lower leverage means more margin posted per dollar of position, a more distant liquidation price, and lower funding cost on the same posted margin. Higher leverage means less margin per dollar of position, a closer liquidation price, and the same notional funding cost. The math compounds against you fast at high leverage on volatile assets.

How to use leverage well

• Start at 2x to 5x while learning. 5x is enough to feel the mechanics and the funding cost without the liquidation distance being uncomfortably close.
• Treat leverage as a tool for capital efficiency on positions you have already sized for risk, not as a way to amplify your risk-per-trade.
• If higher leverage would push your liquidation inside your stop, you have too much leverage for that trade. Reduce leverage, not the stop distance.
• Compare your effective risk percent (stop distance times position size divided by account balance) to the 1% rule baseline. Leverage is fine if the risk percent is in budget.