Leverage Risk Comparison
See what leverage actually changes — and what it doesn't — with the same trade at several leverages side by side.
Trade
Standard model — flat maintenance margin rate, no leverage cap.
Assumptions (all editable)
Comparison
E3 · Modelled Estimate
| Leverage | Margin | Notional | Liquidation | Buffer | PnL | ROE |
|---|
Calculation and assumptions
Educational tool, not investment advice.
A worked example
The same 0.1 BTC long at $60,000, held at five different leverages, with a +5% move priced at each. The interesting column is the one that does not change.
What goes in
- Held constant
- Position size — 0.1 BTC
- Entry price
- $60,000
- Leverages compared
- 2x, 5x, 10x, 20x, 50x
- Scenario
- +5% to $63,000
- Costs
- 0.05% taker, both legs
What comes out
- PnL at 2x
- +$293.85
- PnL at 10x
- +$293.85
- PnL at 50x
- +$293.85
- Margin at 2x → 50x
- $3,000 → $120
- Buffer at 2x → 50x
- 49.72% → 1.45%
- ROE at 2x → 50x
- 9.79% → 244.87%
Every row makes the same $293.85, because every row holds the same amount of Bitcoin and Bitcoin moved the same amount. Leverage did not multiply the profit. It divided the margin — $3,000 down to $120 — and the ROE column rises purely because that shrinking number is the denominator.
What leverage did change is the buffer: how far price can travel against the position before the exchange closes it. At 2x that is nearly 50%. At 50x it is 1.45%, which is inside a normal hour on most pairs. The rows in red are the ones where a routine candle is enough.
Switch the mode to hold margin constant and the picture flips: each row now commits the same $600 and buys a bigger position as leverage rises, so PnL does scale — and so does the loss when the move goes the other way, on the same 1.45% of room. That is the trade leverage actually offers, and it is worth seeing stated plainly rather than felt after the fact.
What each field means
- Hold constant
- Position size or margin. This is the whole point of the tool: the two modes answer different questions and mixing them up is how leverage gets misunderstood.
- Entry price
- Where the position is opened. Every row uses the same entry.
- Position quantity or margin
- Depending on the mode: the coin amount held constant, or the margin committed to each row.
- Leverages to compare
- Up to eight, comma separated. Values that cannot stand at the maintenance-margin assumption are shown as not viable rather than silently dropped.
- Price move scenario
- The move whose PnL and ROE are priced in each row. Negative values work too — seeing the loss column is arguably the more useful direction.
Common questions
Does higher leverage make more profit?
Only if you use it to hold a bigger position. Hold the position size constant and the profit is identical at every leverage, as the table shows. What rises is ROE, because the margin in the denominator got smaller. Confusing those two is what makes 50x look like a better trade instead of a smaller cushion.
Why is ROE so much higher at 50x if the profit is the same?
ROE is profit divided by margin. At 50x the same position only ties up $120 instead of $3,000, so the same $293.85 is a far larger percentage of it. The account balance moved by exactly the same dollars either way.
How much buffer is enough?
There is no universal number, but compare the buffer against the pair's normal daily range. A buffer smaller than a routine day means an ordinary session can liquidate the position without the idea ever being wrong. Rows below 5% are flagged here for that reason.
Why do some leverages show as not viable?
Because at that leverage the initial margin would already be below what the exchange requires to keep the position open, given the maintenance-margin assumption in use. Exchanges also cap leverage by position size, and that cap tightens as the position grows.
Do these liquidation prices match the Liquidation Price tool?
Exactly. Each row is priced by the same solver, so the same inputs cannot produce two different answers on this site.