What leverage is
Leverage is the size of a position divided by the margin behind it. On a perpetual future you post margin, a fraction of the position's value, and the exchange lets you trade the full size: at 10× leverage, $1,000 of margin controls a $10,000 position; at 50×, $200 does. Leverage multiplies gains and losses on your margin alike, and it sets how far the price can move against you before the position is liquidated. The box above shows the most each exchange allows on a small BTC position right now; max leverage by coin has every coin.
Initial and maintenance margin
The initial margin is what you need to open the position: its size divided by the leverage. The maintenance margin is the smaller amount the position must keep while it is open, set by the exchange as a maintenance margin rate (MMR) times the position value. Losses come out of your margin; when what is left falls to the maintenance level, the exchange closes the position at the mark price. The gap between initial and maintenance margin is the loss you can take, which is why higher leverage, with less initial margin, leaves less room.
Isolated vs cross margin
With isolated margin each position has its own fixed margin. If it is liquidated you lose that margin and nothing more, but it is liquidated as soon as that margin runs out. With cross margin the whole account balance backs every open position, so a losing position draws on your free balance and is liquidated later, but a large enough move can take the entire balance, and a loss on one position can liquidate another. Isolated margin limits the damage of one trade; cross margin keeps positions open longer at the cost of putting the whole account at risk.
How the liquidation price is computed
For an isolated position on a linear (USDT-margined) perp, the liquidation price is where the loss has eaten the margin down to the maintenance level:
- Long: entry × (1 − 1/leverage) ÷ (1 − MMR)
- Short: entry × (1 + 1/leverage) ÷ (1 + MMR)
So a long at 10× is liquidated a little less than 10% below its entry, and at 50× a little less than 2% below. Fees and funding paid reduce the margin and pull the liquidation price closer; adding margin pushes it away. Exchanges word the formula differently (Bybit, for example, values the maintenance margin at the entry price), so the liquidation price calculator has a page for each exchange.
Worked example
An illustrative BTC entry of $100,000 and a maintenance margin rate of 0.50% (a typical first tier for BTC), isolated margin, before fees and funding:
| Position | Leverage | Margin per BTC | Liquidation price | Move to liquidation |
|---|---|---|---|---|
| Long | 10x | $10,000 | $90,452.26 | 9.55% |
| Short | 10x | $10,000 | $109,452.74 | 9.45% |
| Long | 50x | $2,000 | $98,492.46 | 1.51% |
| Short | 50x | $2,000 | $101,492.54 | 1.49% |
Five times the leverage puts the liquidation price about five times closer to the entry. Try your own entry, leverage and exchange in the liquidation price calculator.
Leverage tiers: why max leverage falls as size grows
Exchanges do not offer the same leverage on every position size. Each publishes a risk limit or margin tier table: the first tier allows the highest leverage with the lowest MMR, and each larger band of position value gets a lower maximum leverage and a higher MMR. A large position is harder to close without moving the price, so the exchange wants more margin behind it before its insurance fund takes the risk. The box above quotes each exchange's BTC maximum both for its first tier and at a $1M position; Bitcoin max leverage tiers lists every band. Use the MMR of the band your position falls in when you work out a liquidation price.
What leverage does not change
Leverage changes the margin you post, not the position. Profit or loss per contract is the price change times the position size: a $10,000 BTC long gains or loses $100 for every 1% move, at 2× or at 50×. What leverage changes is the return on margin (that $100 is 5% of $2,000 but 50% of $200) and how close the liquidation price sits. It does not change the funding you pay, which is charged on the position value; see what are perpetual futures? for how funding works.
Limits and risks
- High leverage leaves little room. At 50× a normal intraday move can liquidate a position and lose the whole margin; live liquidations show how often that happens.
- Liquidation is triggered by the mark price. The mark price follows the index, so a liquidation can happen even if the last trade on your exchange never reached your price.
- Tiers and formulas differ by exchange. The example uses one MMR for illustration; your exchange's tier table, fees and margin mode decide the real number.
- This page explains how margin works. It is not a recommendation to trade with leverage and not financial advice.
Checked against the exchanges' own documentation on 19 October 2026: Bybit: liquidation price (USDT contract) · Hyperliquid: margining. Not financial advice.