Leverage does not change how far the market moves. It changes how far it can move against you before the position is closed for you. That distance is set by the liquidation price, and it shrinks faster than most traders expect.
The calculation
With isolated margin, the collateral behind a position is the notional value divided by the leverage. At 10x, a $10,000 position is backed by $1,000. A 10% move against it would wipe that out — but the exchange does not wait for zero. It closes the position while a small slice of margin remains, the maintenance margin, to cover the cost of closing.
For a long, roughly:
liquidation price ≈ entry × (1 − 1/leverage + maintenance margin rate)
For a short, the signs flip. Exchanges add details — tiered maintenance rates for large positions, fees, a mark price instead of the last trade — but the shape is the same.
How far that is
Backcandle uses a 0.5% maintenance rate plus a small fee buffer. For a long, the move that triggers liquidation is:
| Leverage | Adverse move to liquidation |
|---|---|
| 2x | about −49.4% |
| 5x | about −19.4% |
| 10x | about −9.4% |
| 20x | about −4.4% |
| 50x | about −1.4% |
| 100x | about −0.4% |
At 100x, ordinary noise on a one-minute chart is enough. At 50x, a single wick on an otherwise quiet day can do it.
Liquidation is not a stop-loss
A stop is a decision: the point where your idea is wrong, sized so the loss is a planned fraction of the account. Liquidation is what happens when there is no such decision. It costs the entire margin of the position, and it fires at a level chosen by arithmetic rather than by the chart.
A useful rule: the stop should sit well inside the liquidation price. If it does not — if the stop you want is beyond the liquidation level — the leverage is too high for the trade, not the stop too wide.
Risk per trade comes from the stop distance and the size, not the leverage. Leverage only decides how much margin is tied up. Ten times the leverage at a tenth of the size is the same risk with the liquidation price much closer.
Isolated and cross
With isolated margin, each position can lose only the margin assigned to it. With cross margin, the whole account balance stands behind every position, which pushes the liquidation price further away but puts the account on the line. Backcandle uses isolated margin per position; you can add margin to a position to move its liquidation price further away, or remove it to free collateral.
Learning where the line is
Liquidations are cheap to experience in replay and expensive to experience live. Events like the October 10 liquidation cascade or the May 2021 crash are useful to replay with a leveraged position open: you see how quickly a liquidation price that looked distant comes into range.
In Backcandle you can also cap leverage per session with the discipline rules, so the limit is set before the trade rather than during it.