How does 10x leverage actually work in trading?

10x works in both directions

With 10x leverage, you deposit $100 and the broker lets you open a position worth $1,000. Your $100 is called margin, the collateral the broker holds against the borrowed portion. From that point on, every price move is calculated on the full $1,000, not on your $100.

If price rises 1%, the $1,000 position gains $10, which is 10% of your money. If price falls 1%, you lose $10, again 10% of your money. Leverage has no preference for direction. It magnifies whatever the market does, good or bad, by exactly the same multiplier.

Margin and liquidation in plain words

The broker has no intention of losing its own money. As the position's loss grows, it eats into your margin, the $100 of collateral. When the loss gets close to consuming it all, the broker closes the position automatically to protect itself. That forced close is called liquidation.

In practice: with 10x leverage, a move of roughly 10% against you is enough to lose the entire margin. That does not require a crash. A 10% move is a bad week in a stock and sometimes a bad day in crypto. The higher the leverage, the smaller the move that wipes you out: around 5% at 20x, around 2% at 50x.

• Margin: your own money, held by the broker as collateral.
• Liquidation: the broker force-closes the position when losses near your margin.
• 10x leverage: roughly a 10% adverse move wipes out the deposit.
• Higher leverage always means a smaller margin for error, never a larger one.

Worked example: the same trade with and without leverage

Say you have $500 and Bitcoin trades at $60,000. Without leverage, you buy $500 worth of Bitcoin. If price drops 8% to $55,200, your loss is $40. Unpleasant, but you still hold $460 worth of Bitcoin and the position survives, with the chance to recover.

Now the same scenario at 10x leverage: your $500 controls a $5,000 position. The identical 8% drop produces a $400 loss, 80% of your money. In reality the position would likely be liquidated before it even got there, since liquidation at 10x arrives near the minus 10% mark. The exact same market move: a manageable loss in one case, a near-total wipeout in the other.

Why beginners should understand it before touching it

Leverage is often marketed as a way to make big gains with little money. The statistical reality is harsher: European regulators require brokers to publish the percentage of retail clients who lose money on leveraged products, and that figure consistently sits above 70%. That is also why retail leverage limits in the EU are capped.

No amount of leverage turns a bad analysis into a good one, it only makes the bad one more expensive. Tradebook teaches leverage as a concept to understand deeply, with scenarios where you watch a liquidation play out in simulation, not as a tool you are encouraged to use.