Yesterday I worked out the formula, and today I decided to test it on a real $BTC example instead of leaving it as “just theory”😅.
The setup is simple: I have $200 in collateral and I’m thinking about what leverage to choose.
Step one — I look at the typical daily move for $BTC over the past week. I got around 3–4% up or down on a regular day, and up to 6–7% on news days.
Step two — I calculate the distance to liquidation using yesterday’s formula (100% / leverage):
— x5 gives a distance of about 20% — enough of a buffer to withstand even a news day;
— x10 gives about 10% — still acceptable, but the buffer gets thinner;
— x20 gives only 5% — that’s already within the range of ordinary daily noise, and that’s exactly where I would’ve been liquidated out of nowhere before.
Step three — I deliberately chose x5, not the highest leverage available, precisely because a 20% buffer gives room to handle a sharp move on a news day, not just a quiet one.
What I learned from this exercise: choosing leverage isn’t about “what’s the maximum they offer,” but “what matches the asset’s actual volatility over the recent period.” The leverage number by itself doesn’t tell you anything without that context.
This isn’t investment advice — just my personal calculation.
Do you recalculate leverage for each asset every time, or do you have one “default” value for everything?👇
$BTC #Futures
The setup is simple: I have $200 in collateral and I’m thinking about what leverage to choose.
Step one — I look at the typical daily move for $BTC over the past week. I got around 3–4% up or down on a regular day, and up to 6–7% on news days.
Step two — I calculate the distance to liquidation using yesterday’s formula (100% / leverage):
— x5 gives a distance of about 20% — enough of a buffer to withstand even a news day;
— x10 gives about 10% — still acceptable, but the buffer gets thinner;
— x20 gives only 5% — that’s already within the range of ordinary daily noise, and that’s exactly where I would’ve been liquidated out of nowhere before.
Step three — I deliberately chose x5, not the highest leverage available, precisely because a 20% buffer gives room to handle a sharp move on a news day, not just a quiet one.
What I learned from this exercise: choosing leverage isn’t about “what’s the maximum they offer,” but “what matches the asset’s actual volatility over the recent period.” The leverage number by itself doesn’t tell you anything without that context.
This isn’t investment advice — just my personal calculation.
Do you recalculate leverage for each asset every time, or do you have one “default” value for everything?👇
$BTC #Futures
