Understanding Leverage: Similarities Between Collateral and Futures Trading

The principle ultimately remains the same: using collateral to leverage and operate with higher volume while accepting greater risk. Although the methods differ, the core concept is similar. For instance, when trading perpetual futures of Bitcoin, one can leverage using a stablecoin as collateral, and the higher the leverage, the closer the position is to liquidation. This highlights that the fundamental behavior of leverage and risk management is consistent across different trading strategies.