Leverage
What is Leverage?
Leverage allows traders to control a larger position with a smaller amount of capital, effectively amplifying potential profits — but also potential losses. For example, using 10x leverage, a trader can open a position worth $10,000 with only $1,000 of their own funds.
Leverage enables traders to:
Take larger market exposure without committing full capital.
Execute hedging strategies or speculative trades with limited upfront funds.
Improve capital efficiency by freeing funds for other positions.
Leverage on OrangeBit
OrangeBit supports adjustable leverage from 1x to 100x for perpetual contracts, giving users flexibility to tailor risk and return according to their trading strategy.
Key Features:
Adjustable Per Position
Users can set leverage independently for each position.
Margin requirements automatically adjust based on leverage and position size.
Isolated vs. Cross Margin
Isolated Margin: Margin is allocated only to the specific position; losses are limited to the margin assigned.
Cross Margin: Entire account balance shares margin across positions, increasing capital efficiency but also potential risk.
Dynamic Risk Management
OrangeBit continuously monitors positions on-chain and off-chain.
Liquidation occurs automatically if margin falls below maintenance requirements.
Partial liquidation reduces cascading risks by closing only the necessary portion of a position.
Non-Custodial Security
Despite high leverage, user assets remain under personal wallet control or in smart contract vaults.
OrangeBit never has authority to move user funds, ensuring security even in leveraged trading.
Funding and Fees
Funding rates maintain perpetual contract price parity with spot markets.
Fees scale with position size and leverage, incentivizing prudent risk management.
A trader wants to long BTC with 20x leverage:
Position size: $20,000
Margin (own capital): $1,000
Potential profit/loss is magnified 20 times relative to the margin.
If the price moves 1% in favor, the trader gains $200 (20 × $10).
If the price moves 1% against, the trader loses $200, risking liquidation if the margin falls below maintenance requirements.
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