Ice and Fire in Leverage Trading: Why 10x, 75x, and 125x Could Destroy Your Account

In the cryptocurrency market, leverage is like a double-edged sword — it can double your profits or instantly swallow your principal. Many traders are tempted by high leverage but overlook the real risks hidden behind the numbers.

First, understand what game you’re playing

When you use leverage, you’re essentially borrowing money to amplify your position. For example:

• 10x leverage: Invest $100 to control a $1,000 position
• 75x leverage: The same $100 allows you to manipulate $7,500
• 125x leverage: $100 instantly becomes $12,500 in buying power

Sounds tempting, but the problem is: every penny of loss is magnified.

The seemingly wonderful profit scenarios (rarely happen)

If the market moves 1000% in your expected direction, profits would grow like this:

Using 10x leverage: $1,000 position → profit of $10,000 (plus initial $1,000) = $11,000

Using 75x leverage: $7,500 position → profit of $75,000 (plus initial $7,500) = $82,500

Using 125x leverage: $12,500 position → profit of $125,000 (plus initial $12,500) = $137,500

Now you understand why traders are so obsessed with high leverage — but this is exactly what exchanges want you to think.

Reality is brutal: the most likely scenario you’ll face

The market won’t always move as you expect. When it moves in the opposite direction, high leverage becomes a meat grinder:

10x leverage risk line: A 10% price drop can wipe out your account

75x leverage risk line: Just a 1.33% adverse move can liquidate you

125x leverage risk line: The terrifying fact — a mere 0.8% market fluctuation can destroy all your capital

This is not alarmist. High leverage means your liquidation price is frighteningly close to your entry point.

Besides liquidation, there are other hidden killers

1. Psychological collapse: Watching your account skyrocket or plummet by thousands of dollars in minutes, anyone would lose rationality. Such extreme volatility leads to emotional trading and bad decisions.

2. Fee black hole: High leverage positions usually come with higher trading fees, financing rates, and overnight costs. These fees quietly eat into your profits, even if the market moves in your favor.

3. Liquidity trap: When you need to close your position, the market may lack sufficient liquidity at your desired price, leading to slippage and additional losses.

How to avoid losing your life when using leverage

If you insist on trading with leverage (most people shouldn’t), at least follow these rules:

Start conservatively: Beginners should stick to 10x or lower. Only consider higher multiples once you truly understand market temperament.

Set stop-loss orders: This is not optional; it’s mandatory. Let stop-losses automatically protect your account and prevent you from making foolish decisions when you lose rationality.

Strict risk management: Risk no more than 1-2% of your total account balance on each trade. That way, even if you lose 10 times in a row, you’re still in the game.

Always monitor liquidation price: Calculate your liquidation level before entering. Know how much the market needs to drop to end your game.

What kind of trader is suitable for what leverage

10x leverage: For those still learning. Controlled risk, won’t bankrupt you overnight.

75x leverage: Only traders who have experienced multiple market swings and truly understand risk management should touch.

125x leverage: For the few with nerves of steel, capable of executing precise strategies, and prepared to lose everything.

Final words: the truth about leverage

Leverage trading is like walking on fire — you might make big money, but you could also get burned. The key isn’t how high a multiple you use, but whether you truly understand the risks and have the discipline to implement risk management.

Most traders using high leverage will eventually lose everything. Those who survive and make money are often not because their predictions are more accurate, but because their risk management is more disciplined.

Choosing your leverage isn’t just a number — it reflects your honest assessment of your trading ability and psychological resilience. If you can’t answer this honestly, lower your leverage until you can.