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What is Leverage?

Author: nicolas tang

Leverage is an investment strategy that helps traders amplify returns by using borrowed funds or other financial assets. However, as much as the potential for returns is amplified, so is the potential risk for losses. Leverage equals the ratio between the total value of the position and the minimum investment required (margin).

How does this apply to Phemex?

On Phemex.com, you can trade Perpetual Contracts with up to 100x leverage. You begin by allocating a certain margin or portion of your funds to open a position. Then, you choose the amount of leverage you wish to use. We adjust your Liquidation Price based on your level of leverage. The more leverage you use, the smaller the distance between your Entry Price and your Liquidation Price. Leverage gives you the potential for significant profits at a minimal cost, but you are also more likely to have your positions liquidated with smaller market movements in the wrong direction.


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