Question on leverage

[gardentalk]

So i am dabbling into trading again and i have a question about leverage. i was wondering if you start out with 100 dollars starting balance and you use 10 leverage and you manage to blow your account, are you liable to pay the full 1000 dollars that leverage gave you? Or you do just lose your initial starting balance?. I am not sure how this works please clear this up for me thanks.

[CryptoboyRamesh]

The higher the leverage you used, the higher the risk. If bitcoin is at $25000 and you used 10x leverage to open a long position, the liquidation price would be around $22500, if you used 1x leverage, the liquidation price would be below $1000, that is if bitcoin get below $1000. Because of the high risk, it is done in a way the exchange would gain from trading fee and the loaners would gain from the high liquidation price, only you will not be favoured, but you have nothing to pay after you lose the whole $100.

[Review_Master2]

No, you can't lose more than the initial starting balance aka margin. Just check the FAQ section of the exchange you use for trading and there is all the necessary information about stop-loss, margin call and stop-out price. My advice is to use max 10x leverage and don't take crazy risks with 500x or 1000x leveraged trades. After getting stop-out, the price will be liquidated automatically by system since no more margin left to support your trade position.
P.S: In rare cases, your balance can go negative but you are not supposed to cover the negative balance depending on the broker/exchange T&C. Once I lost more than $800 in a quick spike and the price slippery causes a few points above my stop loss point but the exchange/broker has agreed to reset the negative balance.

[HeavLeighGill]

Fortunately, you can't lose more than your $100 or go negative because of leverage. If that was the way it worked, we'd all be out of a lot more money!

[indianCrypto]

It doesn't work like that. If you have 100 dollars and you take x10 leverage, then when you open a deal, your position increases by 10 times, and not the deposit. Further, if you close the trade, the exchange immediately takes all the credit money from you and leaves only the available balance + profit if you managed to earn it. If you think that trading with leverage is just an increase in your deposit on the exchange by 10 times, which you can then distribute among different assets, then this is not so. Leverage works only within one trade, it is given and taken away within one trade as well.

[LucaMarco]

Leverage is always double edge sword so traders should use this every cautiously. For scalpers I'll suggest FreshForex broker cause they are now giving 1:2000 ratio leverage facilities even very less spreads for  some major pairs.