What does 125x leverage mean?

Higher leverage means prices must move a smaller % distance before you get liquidated. For instance, with 125x leverage, if prices move against your position by 0.8%, you will get liquidated. Bitcoin and crypto markets are very volatile and there is enough noise for fluctuations of that magnitude to occur frequently.

What is a leverage ratio?

Let's jump in. The term 'leverage ratio' refers to a set of ratios that highlight a business's financial leverage in terms of its assets, liabilities, and equity. They show how much of an organization's capital comes from debt — a solid indication of whether a business can make good on its financial obligations.

What is'leverage'?

What is 'Leverage'. Leverage is an investment strategy of using borrowed money — specifically, the use of various financial instruments or borrowed capital — to increase the potential return of an investment. Leverage can also refer to the amount of debt a firm uses to finance assets. When one refers to a company,...

Does leverage matter in liquidation?

There is one situation where the leverage you use does matter independently of your position size and it has to do with liquidation. Higher leverage means prices must move a smaller % distance before you get liquidated. For instance, with 125x leverage, if prices move against your position by 0.8%, you will get liquidated.