Leverage in Crypto: The Illusion That Makes Traders Poor

We have all seen those stories: a trader with $100 in the account who suddenly boasts $10K of profits. Magical? No. It's leverage. And we've also seen the opposite: the same person with zero in their portfolio a week later.

The Trick That Promises Gold, Delivers Fire

10x leverage means that the broker lends you money. Your $100 turns into $1,000 of purchasing power. Sounds good until it isn't.

Mathematics is brutal:

• Movement in favor of 5% = +$50 of profits (50% return )
• Movement against the 5% = -$50 your deposit is going complete(

It only takes a 10% movement against your position to liquidate you completely. And in crypto, that happens every week.

Why Almost Everyone Loses

The data shows that more than 90% of leveraged traders lose money in the first year. The reasons:

1. Overleveraging: They start with 10x, 20x, or worse. It's like borrowing $19,900 to play with $20,000.
2. Emotion, not strategy: A quick movement generates panic → closes at a loss → tries again with more leverage.
3. Crypto volatility: Bitcoin is not Apple. A news from Elon can move 10% in minutes.
4. Flash Liquidation: The platform automatically closes your position, mercilessly seizing your funds.

If You Insist on Using It, Do It This Way

• Maximum 2x-3x: It barely helps you, but it doesn't destroy you.
• Always stop-loss: Non-negotiable. If you lose X%, you exit automatically.
• Minimum risk-reward 1:2: For every ) you risk, you should aim for $1 in profit.
• Small position: Even if it is 5% of your total account.
• No leverage on alts: Only applies to BTC/ETH if you really know what you're doing.

The Inconvenient Truth

Leverage enriches brokers $2 charge commissions and liquidations(, not traders. It's a game where the odds are against you from the start.

If your strategy only works with leverage, your strategy is weak. If you need 10x to win, you are trading wrong.

Is it possible to win with leverage? Yes. Is it likely? For most, no. Ask yourself: do I really need this weapon or am I just desperate?