Leverage Multiplier: The Hidden Fee that Can Wipe Out Your Position

Exchanges often advertise leverage as a feature that benefits traders, but the reality is more complex. Trading fees are charged on notional value, which means that a leveraged position generates significantly higher fees than an unleveraged one.

The fee arithmetic is straightforward: at 10 times leverage, a 10% adverse move can eliminate the position; at 50 times, a 2% move can do the same. This is particularly problematic in crypto markets, where 2% intraday moves are routine.

Auto-deleveraging queues rank candidates for forced closure by unrealised profit and effective leverage, which means that high-leverage positions are more likely to be terminated, even if they're profitable. The risk engine treats high leverage as a liability marker, not a feature.