Leverage trading in crypto: how margin and the liquidation price work

Leverage trading means trading a larger position than your own capital would allow. With a $1,000 stake and ten times leverage, you move bitcoin worth $10,000: if the price rises 5 percent, you make $500 instead of $50. If it falls 9.5 percent, the exchange closes your position and the stake is gone. In Germany, leverage trading with cryptocurrencies is allowed but capped for retail clients: crypto CFDs may carry at most 2:1 leverage, while the perpetual futures of exchanges with EU authorization go up to ten times.