How isolated margin and leverage work
Written by Moris Nakri
Updated September 15, 2026
Every position risks only the margin you allocated to it; leverage multiplies that margin into position size, from 1x to 50x.
paperxtrade runs isolated margin only. When you open a position, the amount you entered is locked to that position and is the most it can lose. There is no cross margin, so a losing trade cannot pull funds from your other positions or from your free balance.
The arithmetic
- Position size (notional) = margin × leverage.
- Quantity = notional ÷ entry price.
- Available balance = balance − locked margin. Pending limit orders also lock margin.
- Return on equity = unrealised PnL ÷ margin, so 20x turns a 1% price move into roughly 20% on your margin.
Choosing leverage
Leverage never changes how much you can lose on a position — that is always the allocated margin. It changes how far the price has to move to lose it. At 5x the liquidation price sits around 20% away; at 50x it is around 2% away, which ordinary intraday noise can reach.
| Leverage | Notional on 500 margin | Approx. move to liquidation |
|---|---|---|
| 2x | 1,000 | ~49% |
| 10x | 5,000 | ~9.9% |
| 25x | 12,500 | ~4.0% |
| 50x | 25,000 | ~2.0% |
The ceiling is 50x by default and can be lowered by an administrator. On the demo desk, leverage above 10x is limited to three orders in total.