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🔵 Starting Capital: Let’s say you have $100.

🟢 Position and Leverage: Your entire position with leverage should not exceed $100. For instance, if you’re using 50x leverage, your margin should not be more than $2 (since $2 x 50 leverage = $100 total position).

🔴 Liquidation Point: In this way, your liquidation point is not present since your whole position is less than the total amount of funds.

🔵 Why and When to Use Leverage?: Using 5x leverage vs 50x leverage essentially means that you are being lent 5x or 50x your money, respectively.

🟢 The Problem with High Leverage: The issue with high leverage is that if you trade with a position larger than your total funds, you have a liquidation point. But if you don’t, you can be pretty relaxed that you are not going to be liquidated.

🔴 Trading Example: Let’s say you open a position with a $1 margin, 50x leverage, so your whole position is $50 and your margin is $1. If the crypto you chose has made a 1% increase since you opened the position, that means you will have made a 50% return on your margin, or $0.50. If the crypto has made a 10% increase, you have made a 500% return effectively on your margin or $5 on your $1 margin.

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