What is leverage?
Leverage lets you open a position bigger than the money you put up, a multiplier on the trade. It multiplies gains, multiplies losses, and adds one hard edge that doesn’t exist without it: liquidation.
Leverage borrows size so a small move counts for more, and a move against you can hit a liquidation price that closes the position at a loss. Inside your fund it’s a deliberate tool, bounded by the limits you set.
Leverage has ruined more traders than bad ideas have. Not because it is complicated. It is a multiplication, but because it changes the speed of the game while the player is still thinking at the old speed. Here is exactly what it does, with the numbers on the table.
01The mechanics: borrowed size
Put up $100 and open a 2x long on a perp: your position behaves like $200 of the asset. The $100 you posted is your margin The cushion the venue holds against losses. Every 1% the price moves now moves your money 2%. At 5x, 5%. The multiplier applies to both directions with perfect indifference.
| $100 at 2x, the asset moves | Your position | Your $100 becomes |
|---|---|---|
| +10% | +20% | $120 |
| −10% | −20% | $80 |
| −40% | −80% | $20 |
| ≈−50% | wiped | $0, liquidated |
02Liquidation: the edge of the table
Because part of the position is effectively borrowed, the venue will not let losses eat past your margin. When the price reaches the point where your cushion is gone, the position is closed for you, liquidated And the margin is lost. No discussion, no waiting for the rebound. At 2x that edge sits far away; at 10x it sits inside an ordinary day’s noise.
03What leverage is actually for
Used well, leverage is capital efficiency: expressing a $200 conviction while keeping $100 free for the next opportunity. Used badly, it is impatience wearing a calculator. The tell is simple, a disciplined desk sets the position size first, from sizing rules and the thesis, and lets leverage be an implementation detail. An undisciplined one picks the multiplier first and finds the thesis after.
04Leverage inside an Opusfund
In your fund, leverage is a permission, not a default. It exists only where you allow it, capped at the multiple you set, with position limits and stops sitting in front of it, and every leveraged position is explained in the day’s memo like any other bet. The short version is in the FAQ: does the AI use leverage?
Leverage never improves a bet. It only makes the outcome louder. If the trade isn’t worth taking at 1x, it isn’t worth taking at 5x.
How your CEO runs the numbers
With $500 and 4× leverage, your CEO controls $2,000 of exposure. A 5% move in its favour is +$100 A 20% gain on the $500. The same 5% against it is −$100, and a larger move can reach the liquidation price that closes the position for good. Leverage doesn’t change the thesis; it changes how fast being wrong costs you, which is why it stays inside your caps.
What to remember
- Leverage borrows size: 5× means a 1% move acts like 5%.
- Liquidation is the price where the position is force-closed at a loss.
- It’s a tool for conviction and efficiency, not a way to gamble bigger.
- Your CEO uses it inside your caps Never past the risk you’ve allowed.