Leverage in cryptocurrency trading is a financial mechanism that allows traders to borrow funds from an exchange or broker to increase their market exposure. It lets you control a position bigger than your initial investment, maximizing potential profits and losses. With 200x leverage, a $1,000 investment gives you access to a $200,000 trading position.
This powerful tool is popular among traders looking to capitalize on small price movements, especially in highly liquid markets like Bitcoin. However, leverage carries huge risks and requires a clear understanding of how it works to trade successfully and responsibly. We’ll explain the basics and how to set up your first leveraged trade.
Quick Steps on How to Trade Crypto With Leverage:
- Step 1: Choose a Crypto Leverage Trading Platform
- Step 2: Register and Verify Your Account
- Step 3: Deposit Funds Into Your Account
- Step 4: Select the Cryptocurrency You Want to Trade
- Step 5: Adjust the Leverage Level
- Step 6: Enter Position Details (Buy or Sell)
- Step 7: Confirm Your Trade and Open the Position
See our full Video-Guide for Crypto Leverage here:
What Are the Best Platforms to Trade Crypto With Leverage?
Finding the right platform for leveraged crypto trading can significantly impact your experience and results. PrimeXBT and Bitget are two top options, each offering unique features like high leverage and advanced tools to suit different trading styles. Let’s see what they have to offer:
- Low Minimum Deposit: Only 0.001 BTC
- Spreads from 0.1 Pips
- Leverage up to 1:200 for cryptocurrencies and 1:1000 for forex
- Multi-asset trading platform with crypto, forex, and commodities
- No KYC required for most account setups
- Integrated copy trading feature for novice traders
- Leverage Up To 125x
- Fast Deposits / Withdrawals
- Easy Sign-Up Process
- More Than 1,000 Cryptos
- Trading Bots, Copy Trading, Staking & more
- 24/7 Customer Support
PrimeXBT
PrimeXBT is our recommended choice at WR Trading, offering up to 200x leverage on Bitcoin. There are 30 crypto pairs total, allowing traders to gain exposure in different crypto sectors within one exchange. The platform’s trading interface is straightforward and easy to navigate, making it accessible even for those new to trading. It also comes with 90+ indicators and multiple charting tools for technical analysis.
One of PrimeXBT’s standout features is its competitive fee structure, with a low trading fee of 0.05%. This makes it a cost-effective option for frequent traders. However, the platform’s lack of built-in copy trading tools or advanced educational resources might deter beginners who require more guidance. However, for those with a good understanding of leverage and risk management, PrimeXBT is a solid choice as the leverage is ultra-high.
| Feature | Details |
|---|---|
| Max Leverage | 200x |
| Crypto Pairs Available | Over 30 |
| Financial Products | Futures and CFDs |
| Regulation | Financial Services Commission of Mauritius |
| Trading Fees | From 0.1% |
| Additional Features | Copy trading, market research, educational articles, and market news. |
Bitget
Bitget offers up to 125x leverage on top market-cap cryptocurrencies. The exchange is ideal for traders who need advanced tools to manage their leveraged positions effectively. Features such as margin adjustments during trades, precise stop-loss settings, and advanced charting ensure that users have full control over their leveraged positions.
The standout aspect of Bitget is its emphasis on trade management. The platform’s trailing stop-loss feature is useful for leveraged traders, as it allows profits to lock in automatically while minimizing losses in volatile crypto markets.
Furthermore, the fee structure is highly competitive, with maker and taker fees starting at just 0.1%. However, there is a VIP program that lets you progress through levels as you deposit and trade more, which results in lower fees. Also, you can buy the $BGB token (Bitget’s exchange token) to reduce fees by 20%.
| Feature | Details |
|---|---|
| Max Leverage | 125x |
| Crypto Pairs Available | Over 900 |
| Financial Products | Margin, futures, and spot. |
| Regulation | Registered in Seychelles |
| Trading Fees | 0.1% |
| Additional Features | Trading bots, copy trading, earn tab, and responsive customer support. |
How Does Leverage in Crypto Trading Work?
Leverage allows you to trade with more capital than you actually have in your account. It acts as a multiplier, enabling you to control a larger position by putting up a fraction of its value as collateral, known as margin. Here’s a table that displays the leverage ratios along with the margin required:
| Leverage | Your Capital | Position Size You Control | Margin Required |
|---|---|---|---|
| 1:10 | $1,000 | $10,000 | $1,000 (10%) |
| 1:50 | $1,000 | $50,000 | $200 (2%) |
| 1:100 | $1,000 | $100,000 | $100 (1%) |
| 1:200 | $1,000 | $200,000 | $50 (0.5%) |
| 1:500 | $1,000 | $500,000 | $20 (0.2%) |
Leverage Example with Calculation
Let’s explore how leverage can magnify your profits in a rising market. Suppose you have $1,000 in your account and use 10x leverage to trade Bitcoin, which is currently priced at $100,000. By applying leverage, you control a $10,000 position with your $1,000 investment.
- Formula: Profit/Loss = (Closing Price−Opening Price) × Position Size/Opening Price
- Initial Bitcoin Price: $100,000
- Leverage Applied: 10x
- Position Size: $10,000 (your $1,000 × 10 leverage)
If Bitcoin’s price rises by 5%, the new price becomes $105,000. This 5% movement increases the value of your $10,000 position by the same percentage.
- Price Change: $105,000 – $100,000 = $5,000
- Profit on Position: 5% of $10,000 = $500
Your $1,000 investment now generates a $500 profit – a 50% return on your initial margin. Without leverage, this same 5% price movement would have only netted you $50, showing the power of leverage to amplify returns.
For automated calculations on Crypto leverage see our leverage trading calculator.
What Is the Connection Between Leverage and Margin in Crypto Trading?
Leverage allows traders to control larger positions with a smaller upfront investment, while margin is the collateral required to secure that leverage. For example, with 10x leverage, a $1,000 margin gives you control of a $10,000 position. The relationship between the two is straightforward: higher leverage reduces the margin required, but it increases the risk of liquidation if the market moves against you.
| Leverage | Margin Percentage Required |
|---|---|
| 1:10 | 10% |
| 1:50 | 2% |
| 1:100 | 1% |
| 1:200 | 0.5% |
| 1:500 | 0.2% |
How To Trade Cryptos With Leverage
Trading crypto with leverage is easy, as many platforms offer this feature. However, there’s usually a questionnaire that you must fill out that will ask questions related to leverage trading before gaining access. These basic questions revolve around the risk of leverage that anybody trading should know.
Step 1: Choose a Leverage Trading Platform
Select a platform that supports leveraged crypto trading, such as PrimeXBT or Bitget. Check for high leverage, low fees, and user-friendly interfaces to match your experience level. Ensure the platform is available in your region and supports your preferred cryptocurrencies.
Step 2: Register and Verify Your Account
Sign up by providing your email and creating a secure password. Most platforms require identity verification to comply with regulations, which involves submitting a government-issued ID and proof of residence. Verification usually takes a few minutes to a few hours, depending on the platform.
Step 3: Deposit Funds Into Your Account
Fund your account by transferring cryptocurrency or fiat currency supported by the platform. For fiat deposits, use options like bank transfers, credit cards, or other payment methods available. Ensure you meet the minimum deposit requirements to begin trading with leverage.
Step 4: Select the Cryptocurrency You Want to Trade
Open the trading interface and search for the cryptocurrency pair you want to trade, such as BTC/USD or ETH/USDT. Click on the pair to access its trading options. Review the current market trends before proceeding.
Step 5: Adjust the Leverage Level
Use the leverage slider or input field to select your desired leverage ratio, such as 10x, 50x, or 100x. Remember, higher leverage increases potential rewards but also amplifies risks. Beginners should start with lower leverage until they’re comfortable managing trades.
Next, choose your margin type:
- Cross Margin: This option uses your entire available balance to support the trade, helping to avoid liquidation but putting your whole balance at risk if the market moves against you.
- Isolated Margin: Limits the margin to just that specific position, meaning you only risk the allocated amount while keeping the rest of your funds safe.
Step 6: Enter Position Details (Buy or Sell)
Decide whether to go long (buy) or short (sell) based on your market analysis. Input the amount you want to trade and set risk management parameters like stop-loss and take-profit levels. Ensure the position size aligns with your available margin and trading plan.
Step 7: Confirm Your Trade and Open the Position
Double-check all the details, including leverage, position size, and risk settings. Once satisfied, press the “Buy” or “Sell” button to open your position. Monitor the trade closely, as leverage trading can lead to rapid price changes.
Which Financial Products Are Available for Bitcoin Leverage Trading?
Several financial products are available for Bitcoin leverage trading, each suited to different strategies and goals. Here are the most popular:
Perpetual Contracts
Perpetual contracts are one of the most popular instruments for Bitcoin leverage trading. These derivative contracts allow you to trade Bitcoin without actually owning it and have no expiry date. They track the spot market price through funding rates; periodic fees exchanged between traders to balance the market.
Platforms like Binance Futures and Bybit offer leverage up to 125x on perpetual contracts, allowing traders to capitalize on rising and falling markets. However, these contracts require active monitoring to manage funding costs, which can take out profits over time.
Futures Contracts
Futures contracts are agreements to buy or sell Bitcoin at a specific price on a predetermined date. These contracts are for hedging risk or speculating on market movements within a defined timeframe. With leverage options often ranging from 10x to 100x, futures allow traders to magnify their exposure.
The contract is settled automatically, either in cash or Bitcoin, upon expiration, based on the platform. Futures are suited for traders with precise predictions over set timeframes but require careful planning to manage expiry dates and potential liquidation risks.
Margin Trading
Margin trading requires borrowing funds from an exchange to increase your buying power. It’s straightforward and widely available on platforms like PrimeXBT and Bitget, with leverage reaching up to 200x. However, the higher the leverage, the smaller the price movement required to liquidate the position. Margin trading is ideal for those who can actively monitor their trades and maintain sufficient collateral to avoid forced liquidation.
Leveraged Tokens
Leveraged tokens provide a simpler alternative to traditional leverage trading, removing the need to manage margin or worry about liquidation. These tokens represent pre-leveraged positions, such as BTC3L (3x long) or BTC3S (3x short). If Bitcoin rises by 1%, BTC3L increases by 3%. While convenient, leveraged tokens are rebalanced daily, which can reduce their effectiveness for long-term strategies. They are best suited for short-term trades and volatile market conditions.
Crypto CFDs
Crypto CFDs are offering typically a leverage of 1:2 up to 1:50. CFDs (Contract For Difference) are contracts offered by a broker for traders to trade underlying assets like forex, indices, commodities, and also cryptocurrencies. Crypto CFDs are in terms of trading conditions not the best choice because the trading fees are most of the time higher than with Crypto Futures. But the biggest advantage is that you can use reputable Crypto CFD Broker platforms and trade with fiat-money quickly a huge range of different cryptos.
What Are the Pros and Cons of Trading Crypto With Leverage?
Pros
- Amplifies profits, allowing you to earn more from small price movements.
- Requires less capital to open large positions.
- Allows short selling, letting you profit in falling markets.
- Access to advanced tools like margin adjustments and stop-loss orders.
- Provides flexibility with adjustable leverage levels.
- Useful for hedging against other investments.
- Enhances capital efficiency by freeing funds for other trades.
- Allows active traders to maximize short-term opportunities.
- Provides liquidity even in smaller accounts.
- Helps experienced traders implement advanced strategies.
Cons
- Increases losses, meaning small price drops can liquidate your position.
- High leverage increases the risk of liquidation.
- Requires constant monitoring due to market volatility.
- Emotional trading can lead to bigger losses as positions are amplified by leverage.
- Complex for beginners to understand and manage effectively.
- Funding fees and interest on borrowed capital can reduce profits.
- Markets can move faster than expected, causing sudden losses.
- Not suitable for long-term positions due to overnight fees.
- Overconfidence from initial success can lead to excessive risk-taking.
- Risk of forced liquidation if margin requirements aren’t met.
Fees and Costs When Trading Crypto With Leverage
When trading crypto with leverage, it’s essential to understand the fees involved, as they directly affect your profits and losses. These costs can include trading fees, funding rates, and other platform-specific charges. Knowing what to expect allows you to manage your trades more effectively and avoid surprises.
- Trading Fees: Charged for opening and closing a trade, usually a small percentage of the total position size.
- Funding Rates: Periodic fees for holding a position in perpetual contracts. These rates depend on market conditions and whether there’s more demand for long or short positions.
- Liquidation Fees: If your margin isn’t enough to cover losses, the platform will close your position and charge a liquidation fee. This can include a penalty and any remaining losses.
- Overnight Fees: Applied to positions carried over to the next day in margin trading. These are based on the funds you borrow and can add up over time.
Can You Trade Cryptos With Leverage in the USA?
Yes, you can trade cryptos with leverage in the USA, but options are more limited due to regulatory restrictions. U.S.-based exchanges offer lower leverage ratios compared to international platforms, ensuring compliance with local laws. However, some exchanges, like Bitunix, provide access to leverage trading without KYC requirements and up to 125x leverage for certain regions. Here are 3 exchanges that provide leverage trading for U.S. users:
- Bitunix: Up to 125x leverage on select cryptocurrencies.
- Kraken: Up to 5x leverage on a variety of crypto assets.
- eToro USA: Limited leverage for crypto, up to 2x for specific assets.
Can You Trade Crypto Leverage Without KYC?
Yes, some platforms allow you to trade crypto with leverage without KYC (Know Your Customer) verification. Exchanges such as Bitunix offer this option, enabling traders to access high leverage without submitting personal identification documents. While this can be convenient for privacy-focused traders, it’s important to note that non-KYC accounts often have limits on features or withdrawal amounts until verification is completed.
See our related article about Crypto Trading without KYC here.
Can Your Account Balance Become Negative When Trading Cryptos on Leverage?
Yes, your account balance can become negative when trading cryptos with leverage, though most platforms have mechanisms to prevent this. In highly volatile markets, sudden price movements can exceed your margin, resulting in losses greater than your initial deposit. If the platform does not offer negative balance protection, you may owe the exchange additional funds.
However, many modern exchanges, such as Binance and Bitget, implement risk-management features like liquidation and negative balance protection to prevent traders from going into debt.
What Is the Difference Between Cross and Isolated Leverage in Crypto Trading?
Cross leverage uses all the available funds in your account to support a trade, sharing the risk across your balance. If the position starts losing, the platform automatically taps into your remaining funds to prevent liquidation, which can wipe out your entire account if the market doesn’t recover.
Isolated leverage limits your risk to the margin you set for that specific position. If the trade fails, only that allocated amount is lost, leaving the rest of your balance untouched. This makes isolated leverage the safer option, especially when trading with volatile cryptocurrencies.
Conclusion
To summarize, leveraged crypto trading amplifies gains by controlling larger positions with smaller capital, but it comes with substantial risks. Platforms like PrimeXBT, offering up to 200x leverage, and Bitget, with 125x leverage and advanced risk management tools, are excellent options for traders.
However, success in leveraged trading depends on understanding the mechanics, managing costs, and using disciplined risk management to navigate volatile markets effectively. Consider joining a course like WR Trading, where you can learn the ins and outs of trading.
Frequently Asked Questions on Crypto Leverage
What Is the Benefit of Crypto Leverage?
Crypto leverage trading allows you to borrow funds to trade larger positions than your account balance. 10x leverage means controlling a $10,000 position with just $1,000 in capital. It amplifies potential profits, requiring less price movements to make it in the money.
Can I Trade With Leverage as a Beginner?
Yes, but we recommended starting with low leverage, such as 2x or 5x. Higher leverage increases risks, and beginners should focus on learning proper risk management. Practice on demo accounts before committing real capital to leveraged trades.
What Are the Risks of Leverage Trading?
The main risk is liquidation, where the exchange closes your position if losses exceed your margin. Leverage also increases exposure to market volatility, making small price movements impactful. Without proper risk management, you can lose your entire margin quickly.
What fees should I consider when trading with leverage?
Key fees include trading fees, funding rates for perpetual contracts, and potential liquidation fees. Platforms like PrimeXBT and Bitget charge competitive fees starting from 0.1%. Always review the fee structure of your chosen platform to avoid unexpected costs.
Is Leverage Trading Legal in the USA?
Leverage trading is legal in the USA, but options are limited due to regulations. Platforms like Coinbase and Kraken comply with U.S. laws but offer lower leverage than international exchanges. Always use regulated platforms to ensure compliance.
