What Is Leverage Trading? A Beginner's Guide to Crypto Futures

What Is Leverage?

Leverage lets you control a larger position with a smaller amount of capital. If you use 10x leverage, a $100 deposit controls a $1,000 position.

This amplifies both your profits AND your losses. A 10% move in your favor at 10x leverage means 100% profit. A 10% move against you means you lose everything.

How Crypto Futures Work

Crypto futures are contracts that let you speculate on the price of a cryptocurrency without owning it. You can go long (bet the price goes up) or short (bet it goes down).

Perpetual futures — the most popular type on Bybit — have no expiration date. You can hold your position as long as you want, as long as you have enough margin to cover it.

Understanding Margin

Margin is the collateral you put up to open a leveraged position. There are two types:

Cross Margin uses your entire account balance as collateral. This reduces liquidation risk but means a bad trade can affect your whole account.

Isolated Margin dedicates a specific amount of collateral to each trade. If the trade goes wrong, you only lose the isolated amount. Most beginners should use Isolated Margin.

What Is Liquidation?

Liquidation happens when your losses eat through your margin. The exchange automatically closes your position to prevent further losses.

For example, at 10x leverage, you get liquidated if the price moves roughly 10% against you. At 100x leverage, a 1% move can liquidate you.

Always set stop-losses before liquidation price to control your risk manually.

Funding Rates Explained

Perpetual futures use funding rates to keep the futures price close to the spot price. Every 8 hours, one side pays the other.

When the market is bullish and most traders are long, longs pay shorts. When bearish, shorts pay longs.

Funding rates are usually small (0.01% per interval) but can spike during extreme market conditions. Check funding rates before opening large positions.

Safe Leverage Practices

• Start with 2x-5x leverage as a beginner — never 100x
• Always use stop-losses — decide your exit before entering
• Never risk more than 1-2% of your total capital on a single trade
• Use Isolated Margin to limit downside
• Avoid holding leveraged positions through major news events
• Practice on Bybit's demo trading mode before using real money

Getting Started with Futures on Bybit

Bybit's futures platform supports over 350 trading pairs with up to 100x leverage. The interface is clean, fast, and integrated with TradingView charts.

New to futures? Start with Bybit's Demo Trading feature — it gives you fake money to practice with zero risk. Once you're comfortable, switch to live trading with a small amount.

Sign up through our link for reduced trading fees and access to signup bonuses up to $30,000.