Leverage

A position-size multiplier. At 10× leverage a $1,000 account controls a $10,000 position. Leverage scales your profit, your loss, and your liquidation risk by the same factor — but it never changes which trades a strategy takes.

In plain English

Leverage lets you control a position larger than your account. The multiplier (2×, 10×, 50×) scales the dollar outcome of every trade: a +1% price move at 10× is a +10% account move, and a −1% move is −10%. The trades themselves are identical — leverage is applied after the signal decides to enter.

This is the most important and most misunderstood knob in the fleet. Cranking leverage does not make a strategy smarter; it makes the same trades bigger, in both directions. It magnifies a real edge and an imaginary one equally — and it pulls the liquidation price (where the exchange force-closes you because the loss has eaten your margin) closer to the entry, so an ordinary adverse move can wipe the position.

Why it matters for this fleet

Every EMA-cross signal in the dossier is run at five leverage rungs — 1×, 2×, 10×, 50×, 100× — over the same trades. That design isolates exactly what leverage does and doesn't do.

What it doesn't do — change the trades. id659 (1×) and id523 (2×) are the same signal (EMA 21/50 · SOL · 1h · long): identical 436 trades, identical 139 wins / 297 losses, identical 31.9% win rate. The 1×≡2× trade identity holds across the fleet — leverage scaled the result, never the decisions. (This is a core simulator fidelity check.)

What it does do — deepen the cliff. The median worst drawdown (deepest peak-to-trough equity fall) per rung:

Read edge at 2×, where liquidation sits far away and profit/loss tracks signal quality. Read 50× and above as the liquidation-cliff finder, never as a measure of skill.

Examples from the live fleet

• id659 (1×) vs id523 (2×) — the identity pair: the same 436 trades, the only difference being drawdown (−5.1% vs −9.9%). Leverage moved the risk, not the strategy.
• id522 (EMA 21/50 · ETH · 4h · 50× · long) — the only edge-significant row that beat buy-and-hold. It did so purely through 50× amplified beta (raw market exposure), not skill — paid for with a −60.9% drawdown. Strip the leverage and it loses to simply holding ETH.
• All 6 of the fleet's buy-and-hold beaters are 50× longs. Not one strategy beat its asset at a fair 2×. Beating the market here was a leverage trick, not an edge.

The trap

High leverage flatters a strategy two ways: it produces eye-catching returns, and (in this simulator's 5%-position-sizing model) it rarely shows an outright bankruptcy — equity just bleeds toward zero. A −98% drawdown "survived," but no human holds through that. Leverage is how a mediocre signal looks spectacular, and how a small mistake becomes a wipeout. See risk of ruin and drawdown.

Related

• liquidation
• drawdown
• risk of ruin
• bankruptcy
• simulator fidelity
• edge
• alpha
• risk adjusted return

Sources

• growth/content/dossiers/ema-cross/1-analysis.md (run 83 analysis)
• growth/content/dossiers/ema-cross/1-dataset.csv (the 210-row result set)