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Trading

What Is Leverage?

Using borrowed capital to amplify the potential returns (and risks) of a position.

Definition

Leverage allows you to control a larger position than your capital would normally allow. 2x leverage means $100 controls $200 of exposure. Gains and losses are multiplied by the leverage factor.

How It Works

Deposit collateral, borrow against it, and use the borrowed funds to increase position size. With 2x leverage, a 10% price move results in 20% gain or loss on your capital.

In Continuum

Continuum doesn't provide native leverage, but you can create it: Mint L/S → sell S → deposit L as collateral on lending protocol → borrow USDC → repeat. This loops create leveraged exposure.

Related Terms

Liquidation

Forced closure of a position when collateral value falls below required levels.

Collateral

Assets deposited to back or secure a financial position.

Lending Protocol

A DeFi application that allows users to lend assets and earn yield, or borrow against collateral.

More Trading Terms

LiquidationFunding RatePerpetual Futures (Perps)Arbitrage

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