Leverage Mechanics
Leverage allows traders to open positions that are larger than their actual capital by using borrowed funds.
It amplifies both potential profits and potential losses.
On 6MM, leverage is applied to U-margined perpetual contracts and is calculated using stablecoins such as USDT.
What Is Leverage? (Simple Explanation)
Leverage is expressed as a multiplier, such as 2×, 5×, or 10×.
For example:
With 1,000 USDT and 5× leverage, you can open a position worth 5,000 USDT
A 1% price move results in approximately a 5% gain or loss on your margin
Leverage increases exposure, not free capital.
How Leverage Affects Margin
When you open a leveraged position, part of your balance is locked as margin.
Margin depends on:
Position size
Selected leverage
Current mark price
Higher leverage:
Requires less initial margin
Leaves less room for price movement
Increases liquidation risk
Initial Margin vs. Maintenance Margin
6MM uses two key margin concepts:
Initial Margin
The minimum amount required to open a position
Calculated based on leverage and position size
Maintenance Margin
The minimum amount required to keep a position open
If your margin balance falls below this level, liquidation may occur
Mark Price and Liquidation
Liquidation on 6MM is based on the mark price, not the last traded price.
This helps:
Reduce liquidations caused by short-term price spikes
Provide fairer risk management during volatile markets
Changing Leverage
Depending on the trading pair and partner configuration, users may:
Adjust leverage before opening a position
In some cases, adjust leverage for open positions
Changes in leverage affect margin requirements in real time.
Leverage Example (Beginner-Friendly)
Account balance: 1,000 USDT
Selected leverage: 10×
Position size: 10,000 USDT
If the price moves:
+1% → approximately +10% profit
−1% → approximately −10% loss
A larger adverse move may result in liquidation.
Best Practices for Beginners
Start with low leverage (e.g. 2×–5×)
Monitor margin ratio regularly
Use Stop Loss to control downside risk
Avoid using maximum leverage in volatile markets
Summary
Leverage is a powerful tool that can enhance trading efficiency when used responsibly.
On 6MM:
Leverage amplifies exposure, not capital
Margin and liquidation are calculated in real time
Risk is managed using mark price–based mechanisms
Understanding leverage mechanics is essential before trading perpetual contracts.
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