How do leverage and margin work in crypto derivatives?

Leverage lets traders borrow money to trade with more than they own. If you have $1,000 and use 10x leverage, you control $10,000 worth of crypto. Margin is the collateral you deposit to borrow these funds. When you profit, gains are multiplied—a 10% price increase becomes 100%. However, losses multiply too. If the price drops 10% on 10x leverage, you lose your entire $1,000. Exchanges automatically 'liquidate' your position (force-close trades) when losses approach your margin amount, preventing debt. Leverage derivatives like futures contracts are risky for beginners. Professional traders use leverage carefully with stop-loss orders to limit losses. Always understand liquidation price before trading.