Leverage System
How Leverage Works
Leverage lets you control a bigger position with less money. But it also increases your risk - you can lose money faster.
How Leverage Works
Simple Example:
You deposit $100 TAO
You use 3x leverage
Your position size is $300 (3x your deposit)
What This Means:
If price goes up 10%, you make $30 (30% return on your $100)
If price goes down 10%, you lose $30 (30% loss on your $100)
If price goes down 33%, you lose everything (liquidation)
Current Leverage Limits
Maximum Leverage: 3x (This will increase later)
Available Options: 1x, 2x, or 3x leverage
What Each Means:
1x Leverage: No leverage. $100 deposit = $100 position. Safest option.
2x Leverage: $100 deposit = $200 position. Moderate risk.
3x Leverage: $100 deposit = $300 position. Higher risk - price only needs to move 33% against you to lose everything.
⚠️ Important Warning
The higher your leverage, the faster you can lose money:
3x Leverage: Price moves 33% against you = total loss
2x Leverage: Price moves 50% against you = total loss
1x Leverage: Price moves 100% against you = total loss (very unlikely)
Start with 1x or 2x leverage until you understand how it works.
Margin Requirements
MegaTAO watches your margin ratio to keep you safe:
Healthy (35%+): You're doing fine. Keep monitoring but no action needed.
Caution (25-35%): Getting risky. Watch closely and consider adding more margin.
Danger (20-25%): Very risky! Add margin right away or you might get liquidated.
Liquidation (<20%): Your position closes automatically with a 5% penalty fee.
⚠️ Risk Examples
How Price Moves Affect You
With 3x leverage, here's what happens with different price movements:
Price goes up 10%: You make 30% profit (10% × 3x)
Price goes up 20%: You make 60% profit (20% × 3x)
Price goes down 10%: You lose 30% (10% × 3x)
Price goes down 33%: You lose everything (liquidation)
Key Point: Leverage multiplies both your profits AND your losses.
Liquidation Prices
Your position gets liquidated (closed automatically) when:
Long position: Price drops 33% from your entry (with 3x leverage)
Short position: Price rises 33% from your entry (with 3x leverage)
Example: You go long at $100 with 3x leverage. If price drops to $67, you get liquidated.
🎯 Choosing Your Leverage
Beginners: Start with 1x leverage. Learn how trading works before using leverage.
Experienced Traders: 2x-3x leverage is available. Only use 3x if you understand the risks.
Remember: Higher leverage = higher risk. Start low and work your way up as you learn.
Market Conditions Matter
Volatile Markets: Use lower leverage (1x-2x). Prices move fast and you can lose money quickly.
Stable Markets: You can use higher leverage (up to 3x) when prices are more predictable.
Uncertain Markets: Stick with 1x leverage until you're confident about the direction.
Funding Costs
You pay a small fee (funding rate) every 8 hours for holding your position. This fee is based on your total position size, so higher leverage = higher fees.
Example:
$300 position with 3x leverage = small fee every 8 hours
The fee amount changes based on market conditions
Next Steps
Position Management - Learn about positions
Risk Management - Stay safe
⚠️ WARNING: With 3x leverage, a 33% price move against you = total loss. Start with 1x leverage and learn first.
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