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Leverage
Borrowed capital that multiplies position size — and proportionally multiplies both gains and losses.
What it is
Leverage lets you control a position larger than your capital. 10× leverage on $1,000 = a $10,000 position. A 10% move in your favor = $1,000 profit (100% gain on capital). A 10% move against = total liquidation. Leverage is the #1 reason retail crypto traders lose their accounts: a 5% adverse move on 20× leverage wipes out 100% of margin. Conservative pros use 2–3× max; serious risk managers use 1× (spot only). Higher leverage doesn't mean higher returns over time — it means faster path to zero. Funding rates also compound: on heavily-leveraged longs you pay funding to shorts 3× daily.
Example
Trader A: $1,000 spot BTC at 1× leverage. BTC drops 30%. Account: $700. Trader B: $1,000 BTC at 10× leverage. BTC drops 10%. Account: liquidated, $0. Both traders had the SAME thesis. Only the leverage differs.
How Indikora uses Leverage
Indikora's AutoTrader is hardcoded to MAX_LEVERAGE = 1× (spot only) — no futures, no margin, no liquidation risk. The Coach also warns when manual positions exceed user-set leverage caps.
Related terms
- Liquidation — Forced position close by the exchange when losses consume all posted margin — common with high leverage.
- Futures Contract — A derivative contract tracking an asset's price — used for leverage, shorting, and hedging.