Data as of October 1, 2026. Perpetual contracts are complex instruments and may be liquidated rapidly. Funding rates and mark prices change without notice. Leverage magnifies gains and losses. Fees, network costs, and slippage reduce returns. Past performance is not indicative of future results.
The two are directly connected: the higher your leverage, the smaller the price move needed to bring your position toward liquidation.
What is the difference between margin and position size?
Imagine you have $100 and want to open a Bitcoin perpetual position:
Your funds (margin) | Leverage | Position size |
|---|---|---|
$100 | 10× | $1,000 |
$100 | 50× | $5,000 |
Your own funds are still $100 in both cases. The $100 supporting the trade is your margin; the $1,000 or $5,000 trade is your position size. Your profit and loss are calculated from the full position size — not only from the margin.
How does leverage affect gains and losses?
When Bitcoin moves by the same 1%, the effect on your $100 depends entirely on leverage:
Leverage | Position | BTC move | Profit/Loss | Relative to $100 |
|---|---|---|---|---|
10× | $1,000 | +1% | +$10 | ~+10% |
50× | $5,000 | +1% | +$50 | ~+50% |
10× | $1,000 | −1% | −$10 | ~−10% |
50× | $5,000 | −1% | −$50 | ~−50% |
The key point: leverage does not make Bitcoin move more. It makes the same price movement create a larger profit or loss for you. (These are simplified examples before fees, funding, and margin requirements.)
Why does higher leverage create more liquidation risk?
Liquidation happens when your account no longer has enough value to safely support a leveraged position. Continuing the example: at 50× leverage on a $5,000 position, a 1% drop already costs around $50 — half of your $100. If Bitcoin keeps moving against you, there may soon be too little value left to support the trade, and the position may be liquidated.
With higher leverage, a smaller market move can cause a large loss, which means you have less room for the market to move against you before liquidation becomes possible.
On-screen takeaway: Higher leverage = larger position = larger gain or loss from the same price move. Larger losses bring liquidation closer.
Nado may offer up to 50× leverage on eligible BTC markets and up to 20× on eligible tokenized stock markets. But the maximum is not a recommended amount — it’s simply the highest the platform allows. Using lower leverage creates a smaller position from the same funds, producing a smaller dollar loss from the same price move.
How is liquidation different from a stop-loss?
A stop-loss is an order you choose to set — for example, closing the position if Bitcoin falls by a certain amount. It’s designed to close the trade before the loss grows larger.
Liquidation happens automatically when your account can no longer safely support the position.
Ideally, you should manage or close a position before it ever reaches liquidation.
Key takeaways
Margin is the funds supporting your trade; position size is the full value of the trade.
Profit and loss are calculated on the full position size.
The same 1% move affects your account far more at 50× than at 10×.
Higher leverage leaves less room before liquidation.
A stop-loss is a level you choose; liquidation is automatic.