How to Trade with Leverage on Bybit: A Step-By-Step Tutorial

TL;DR
A comprehensive step-by-step guide on leveraging your trades on Bybit, showing how to set up, execute, and manage leverage positions effectively to amplify potential gains in the crypto market.

Things get real when you start using leverage in crypto. This is a game that offers the potential for huge rewards, but it also comes with massive risks. So, in order to increase your odds of success, while also not losing a ton of money in the process, you need to know what the hell you’re doing.

So if Bybit is your primary crypto exchange, and you’re ready to begin using leverage, then this article is for you. However, do make sure you’ve mastered the concepts in the following two articles before advancing to using leverage on Bybit.

• Understanding Bybit’s Derivatives Market: How to Trade Futures, Options, and Perpetuals
• Spot Trading on Bybit: A Beginner’s Guide to Buying and Selling Cryptocurrencies
• Advanced Trading Strategies on Bybit: Tips and Techniques for Maximizing Profits

Ok, let’s do this!

Leverage 101: The Fundamentals

Before we dive into how to use leverage on Bybit, let’s first discuss the fundamentals of leverage. Because having a solid grasp of these fundamentals will undoubtedly make you a better leverage trader.

Simply put, leverage trading is the borrowing of funds to increase the size of your trading capital. This means that leverage allows you to have more funds for trading than the total dollar amount in your account. To put it another way, leverage gives you more bang for your buck. But it also increases your risk. 

Here’s the most basic elements to know. 

• Margin: The total amount of funds you’re bringing to the table. This is usually the total dollar value that’s in your account. Bybit uses your margin as collateral to secure the loan that they’re issuing to you.
• Leverage Multiplier: The amount that you’re “levering up” your margin. This is expressed as a multiplier (i.e. 2X, 10X, 100X, etc). 
• Liquidation Price: The price at which Bybit closes your position, and takes away your margin (i.e. you get liquidated). All exchanges do this to protect their loans. Your liquidation price = asset price – (asset price / leverage multiplier).

Here’s a basic example of these elements in action. Assume we’re using a bitcoin perpetual contract.

• You’ve got $20K in your Bybit account (i.e. your max potential margin is $20K).
• Bitcoin is trading at $60K. You’re bullish, and you want price exposure to a full coin.
• So, you lever-up your $20K of margin by 3X (i.e. your leverage multiplier). To put it another way, Bybit loans you $40K, and your $20K of margin acts as collateral to protect Bybit’s loan.
• Now you have $60K of trading capital. So you “long” bitcoin with the $60K. This gives you exposure to the price movement of a full bitcoin, but with only one-third the money.

Because you’re exposed to a full bitcoin, your profit or loss will be 1:1 to however much bitcoin goes above or below $60K. If BTC goes to $70K, and you close your contract, you profit $10K (i.e. 50% profit from your original capital). If BTC falls to $50K, and you close your contract, you lose $10K (i.e. a 50% loss). Simple enough.

But here’s the big question: what’s your liquidation price in this scenario? The answer is that it’s a bit higher than $40K. Remember, the exchange must protect their loan. So, a bit above a $40K bitcoin would be the point at which the exchange would be forced to close your trade and take away your $20K (i.e. $40K = $60K – ($60K / 3). 

Leverage 201: Going Deeper

Now that you’ve got the fundamentals, let’s explore a few more important leverage features on Bybit.

• Isolated Margin: Bybit only uses as collateral a specific amount of margin that you allocate for the one trade. Meaning, the exchange can only liquidate this specific amount, in the event your trade goes bad.
• Cross Margin: Bybit uses all the funds “across” your entire account for collateral. This means that your entire account can be liquidated.
• Initial Margin Rate: Shows how much of your initial margin balance has been deployed as collateral. Hitting 100% means you’ve tapped out your available balance (i.e. you can’t increase your leverage or open any new leverage trades).
• Maintenance Margin Rate (MMR): Shows in percentage terms how close you are to liquidation (i.e. hitting 100% means liquidation).

It’s critical to keep a close watch on your MMR, given you don’t want to be liquidated. In the event that your MMR is getting close to 100%, and you want to keep your trade(s) open, then you’ll need to “top-up”, or increase, your margin balance. We’ll show you how to do this in the next section.

Using Leverage on Bybit

Now let’s explore how you can use leverage on Bybit. While you’ll be able to find leverage on some of Bybit’s more exotic features (i.e. leveraged trading bots, etc), the bread-and-butter is found both in Bybit’s spot and derivative markets.

In the spot market, you can use up to 10X leverage to either long or short a huge selection of cryptos. In the derivatives market, you can use leverage on Bybit’s futures, options, and perpetual contracts. Bybit offers up to 100X leverage an many of its derivative cryptos.

Basic Leverage Trade: A Step-By-Step Example

Now let’s review how to make a basic leverage trade. This will be easy now that you understand all the fundamentals and elements.

Suppose you want to trade bitcoin with leverage, with a USDT perpetual contract. To do that, you’d only need to do the following:

1. In the order pair menu, make sure you selected the BTC/USDT perpetual contract.
2. In the order maker, select either isolated or cross margin.
3. Select your leverage multiplier.
4. Select your order type.
5. Select how much of the asset you want to trade.
6. Click either long or short to initiate your trade.
7. This is where you can monitor your margin levels. If you need to “top up” your margin, you can do it by clicking the margin “deposit” icon, and then adding additional margin as collateral to the trade.

And it’s this simple folks. If you initiated these steps, then you’d have successfully either longed or shorted a bitcoin derivative with leverage. Nice work kids!

Most Important Strategies when Using Leverage on Bybit

Things can get very dicy when you start levering trades. Huge potential for rewards, but huge risks. So, here’s our top strategies when it comes to using leverage on Bybit. Employing what’s stated below will help prevent you from getting liquidated, which keeps you in the game over the long run.

1. Understand that Leverage is Always a 1:1 Risk-to-Reward Ratio

No matter how you slice it, when it comes to leverage, your risk-to-reward is always a 1:1. This applies regardless of whether you’re employing 2X or 100X leverage, isolated or cross margin, or any kind of order type. The best way to drive this concept home is by remembering that the higher your leverage, the easier it is to get liquidated. Therefore, if your risk-to-reward is always a 1:1, then your success with leverage depends on how well you can employ fundamental and technical analysis for the particular asset that you’re trading.

2. Don’t Go Higher Than 5X Leverage

Crypto is already super volatile. In our experience, going past 5X leverage is a recipe for disaster. I’ve nuked a five-figure account by getting too greedy with leverage.

3. Stop Losses are Mandatory

And how did I nuke this five-figure account? I used too much leverage and didn’t use a stop loss. Don’t do this. Use a stop loss on every single leverage trade.

4. Use Either a Take Profit or a Trailing Stop Loss

You need to use one or the other. Personally, I like using trailing stop losses on my leverage trades, because they help you capture the insane upside potential that can happen when it comes to crypto pumps, while also progressively locking in your profits on the way up.

5. Use Isolated Margin

If you’re keeping your leverage low and using a stop loss, then this isn’t as important. But, if you’re not, then absolutely make sure you’re using isolated margin rather than cross margin. Otherwise you’ll could very easily wipe out your entire account.

If you are new to this, please read our Comprehensive Guide for Beginners on Bybit 

Mastering Trading Course – by Lark Davis

Want to take your trading skills on Bybit up a notch? Check out the Mastering Trading Course, created by Lark Davis himself. Inside, you’ll find practical, step-by-step guidance on reading market signals and using technical analysis tools. Plus, there’s a dedicated module on how to get the most out of Bybit—perfect for anyone aiming to become a confident, skilled trader on the platform. Whether you’re new to trading or looking to sharpen your strategies, this course has everything you need to trade smarter and with real confidence.

Closing Thoughts

Things start to get a bit more complex when using leverage, but if you understand what’s been presented above, then you have a solid foundation to begin leverage trading. But honestly, the most important thing in this space is minimizing your liquidation risk, so make sure you use the strategies mentioned in the previous section when you’re leverage trading on Bybit.

If you can do that, be patient, and use solid fundamental and technical analysis to pinpoint your entry and exit points, then leverage trading can be a profitable endeavor. Best of luck!

ps. we compared Bybit vs Coinbase and Bybit vs Binance, might be interesting to give that a read too.