Exposure from a smaller deposit
Leverage describes the relationship between position size and collateral. With $500 collateral at 4× leverage, you control $2,000 of market exposure.
A 1% move in the market changes a $2,000 position by about $20 before costs. Relative to $500 collateral, that is a 4% change.
Initial and maintenance margin
Initial margin is what the venue requires to open a position. Maintenance margin is the minimum equity needed to keep it open.
If losses reduce position equity to the maintenance threshold, the venue can liquidate part or all of the position. Fees and funding may move that threshold closer over time.
Isolated and cross margin
Isolated margin assigns collateral to one position. The amount at risk is more clearly bounded, although liquidation can occur sooner if no additional margin is provided.
Cross margin shares eligible account collateral across positions. It can prevent one position from liquidating as quickly, but a losing position can consume funds that support other positions.
Choosing leverage
Maximum leverage is a venue limit, not a recommendation. A trader can use a small amount of leverage while keeping additional collateral available.
Start from the loss you are willing to tolerate and the distance to invalidation, then derive position size. Starting from the maximum position the interface allows reverses that logic.
Margin is a performance resource
In futures terminology, margin is a performance bond rather than a partial purchase payment. Initial margin governs whether exposure can be opened. Maintenance margin governs whether it can remain open. A provider may impose requirements above a base venue minimum, and larger positions can enter higher risk tiers.124
Account leverage is dynamic. If a position loses value, equity falls while notional may remain large, so effective leverage rises. Adding another correlated position can also consume shared margin even if the original position is unchanged.4
Stress leverage in account currency
Convert a plausible adverse move into currency loss, add estimated exit costs and funding, and compare the result with available equity. This is more informative than asking only for the maximum leverage because it connects market volatility to the amount that can actually be lost.3