Journal entry
Leverage is a magnifier, not a strategy
Leverage doesn't make a bad idea good. It makes every idea louder, including the ones that are wrong.
On October 10, 2025, a sharp sell-off wiped out roughly $19 billion in leveraged crypto positions in a single day, according to industry data reported at the time. A year later, I still use it as a reminder.
What leverage actually does
It lets you open a position bigger than your account. That's all. It doesn't change the chance that your idea is right; it changes how much a wrong idea costs, and how fast.
With high leverage, normal market noise can close your position before your idea even has time to play out.
How I think about it
I size from the stop first. Then I check whether the required size needs leverage at all. Most of the time, it doesn't.
If an idea only works at high leverage, it's not an idea. It's a lottery ticket with extra steps.
A note on regulation
It's no accident that US regulators' new rulemaking focuses on retail crypto trading with “leverage, margin or financing”. It's where most of the damage happens. See the digest for details.