> ## Documentation Index
> Fetch the complete documentation index at: https://faction.trade/docs/llms.txt
> Use this file to discover all available pages before exploring further.

# Leverage and margin

> How leverage works, margin modes, and liquidation on Faction Trade.

Leverage lets you control a larger position with less capital. Faction Trade supports up to 20x leverage on perpetual contracts.

## What is leverage

Leverage multiplies your market exposure. With 10x leverage, a $100 margin controls a $1,000 position. This amplifies both gains and losses proportionally.

| Margin | Leverage | Position size | 1% price move PnL |
| ------ | -------- | ------------- | ----------------- |
| \$100  | 1x       | \$100         | \$1               |
| \$100  | 5x       | \$500         | \$5               |
| \$100  | 10x      | \$1,000       | \$10              |
| \$100  | 20x      | \$2,000       | \$20              |

## How to set leverage

Click the **leverage button** in the trade panel (it shows your current leverage like "20x"). A dialog opens where you can adjust the slider from 1x to the maximum allowed for the selected asset.

Leverage is set per asset. Changing leverage on BTC does not affect your ETH leverage.

## Margin modes

Faction Trade offers two margin modes. You can switch between them using the margin mode selector in the trade panel.

<Tabs>
  <Tab title="Cross margin">
    Your **entire available balance** acts as collateral for all open positions. If one position moves against you, your other available funds help prevent liquidation.

    **Pros:** Lower liquidation risk, margin is shared across positions.

    **Cons:** A large losing position can affect your entire account balance.
  </Tab>

  <Tab title="Isolated margin">
    Only the **margin allocated to a specific position** is at risk. If the position gets liquidated, you lose only the margin assigned to it — not your entire balance.

    **Pros:** Limits your maximum loss per position.

    **Cons:** Higher liquidation risk per position since less margin is backing it.
  </Tab>
</Tabs>

## Liquidation

Liquidation happens when your margin can no longer sustain the losses on a position. The exchange force-closes the position to prevent further losses.

**How to reduce liquidation risk:**

* Use lower leverage — more margin relative to position size means a wider buffer
* Set a [stop loss](/trading/tp-sl) to exit before liquidation
* Monitor your **liquidation price** shown in the positions panel
* In cross margin mode, keep additional funds in your account as a buffer

<Warning>
  Higher leverage means your liquidation price is closer to your entry price. At 20x leverage, a move of roughly 5% against you can trigger liquidation. Use high leverage only if you fully understand the risks.
</Warning>