Editing Crypto Leverage Explained (section)

== How Does Crypto Leverage Work? ==
When you use leverage, you are essentially borrowing funds from the exchange. The amount of leverage you can use depends on the platform and the specific contract. For example, some [[best crypto futures platforms]] offer leverage up to 100x or more.

Here’s a simple example:
- You deposit $1,000 and use 10x leverage.
- Your position size becomes $10,000.
- If the price moves 5% in your favor, you earn $500 (5% of $10,000).
- If the price moves 5% against you, you lose $500.

However, leverage also increases the risk of liquidation, where your position is automatically closed if your losses exceed your margin.