Educational content only. Not financial advice. Trading crypto carries risk, including total loss.
What leverage actually does
Leverage of, say, 10x means a trader puts up a tenth of a position's value as collateral (often called margin), and borrows the rest to open the full position. If the position moves 5% in the trader's favor, the return on the collateral put up is roughly 50% — leverage multiplies the percentage move by the leverage factor. The same multiplication applies in the other direction: a 5% adverse move against 10x leverage wipes out roughly half the collateral.
What liquidation price means
Because the position is partly borrowed, the lender (the protocol or exchange) needs the collateral to always be worth enough to cover a potential loss. The liquidation price is the price at which the remaining collateral is no longer considered sufficient, and the position is automatically closed by the protocol to prevent the loss from exceeding what was put up. Getting liquidated typically means losing the collateral behind that position, regardless of what price does immediately afterward.
Liquidation price calculator
This uses a simplified textbook formula that ignores fees, funding payments and maintenance margin — real liquidation prices from any given protocol will differ from this estimate.
Why real liquidation prices differ
Real venues add a maintenance margin requirement — a buffer kept above zero collateral, so the position is closed before it can turn into a debt the trader owes the protocol. Funding payments (see perpetual futures and funding) also nudge collateral up or down over time, shifting the actual liquidation price as a position ages. Treat any liquidation estimate as a rough guide, and always check the exact formula published by the specific venue being used.
What GaurdWallet supports today
The GaurdWallet trading terminal has no leverage today — every position is spot, fully paid for, with no liquidation price at all. This page exists as educational groundwork for understanding leverage before it becomes relevant to any product, here or elsewhere.