Leverage and Liquidation

What is Leverage?

Traders can use leverage to control larger positions with less capital. For example, 2x leverage allows a $2,000 position with just $1,000. Rails offers 1x to 10x leverage, provided you have sufficient balance.

Higher leverage increases both potential gains and risks. Ensure your available balance covers the required collateral; otherwise, you cannot open a trade. If unrealized Profit & Loss (P&L) reaches your balance, your position will auto-liquidate.

Leverage is applied at the account level, not the trade level. This means that all open positions must use the same leverage until closed.

How Does Liquidation Work?

When you trade with leverage, your position can be liquidated if the market moves against you. Your liquidation price (the index price at which your position will be liquidated) is the maximum absolute index price permitted to maintain a non-negative account balance. This can be viewed in the Position tab on the main Trade page as shown below.

Liquidation happens automatically if your position moves against you faster than you can add funds. To help protect your balance, consider setting trigger orders.