One of the most misunderstood aspects of trading is leverage — and a common myth is that leverage affects your strategy’s win rate. Many traders believe that using higher leverage somehow increases the chance of losses or alters the performance of their system. But the truth is: leverage does not change your win rate — it changes your risk exposure. Your trading strategy’s accuracy remains the same whether you’re using 1x or 100x leverage. What leverage affects is how much you win or lose per trade, not how often you win.

This article breaks down how leverage actually works, what it impacts, and how to use it without distorting your system.

Why people believe this myth

1. Losses feel worse with high leverage
When traders use 50x or 100x leverage, small price movements lead to huge P&L swings. If they lose, they often blame the leverage — not the trade logic.

2. Overleverage leads to stop-outs and margin calls
Traders who risk too much per trade get stopped out early — even if their setup would have worked with a wider stop. This leads them to assume leverage “killed” the win.

3. Confusing leverage with position size
Many don’t realise that leverage is a tool to scale size, not a strategy itself. Improper position sizing with high leverage causes emotional, erratic execution.

4. Platforms like crypto exchanges amplify the impact
Exchanges offering 100x–125x leverage liquidate positions instantly if price moves 1% or less — creating a false link between leverage and system failure.

The truth: leverage has no effect on win rate

1. Your strategy’s win rate is based on:

• Entry criteria
• Market structure
• Risk-reward ratios
• Execution discipline
  None of these change with the amount of borrowed capital you’re using.

2. Leverage only magnifies outcomes, not probabilities

• If your trade would win 6 out of 10 times at 1x, it’ll still win 6 out of 10 times at 50x.
• The size of each win/loss in monetary terms increases, but not the frequency.

3. Improper leverage management creates the illusion of poor win rate

• Using too much leverage leads to premature stop-outs.
• That’s not a strategy failure — it’s poor risk sizing and emotional pressure.

4. Traders change behaviour under leverage pressure

• Overleveraged traders close early, move stops, or panic-enter.
• This inconsistency — not the leverage — is what lowers win rate in practice.

How leverage should be used

• Determine your risk per trade first (e.g. 1% of account)
• Then adjust your position size, using leverage only as needed to match that risk
• Use larger stops with smaller size if needed — don’t crowd your trades with tight exits
• View leverage as capital efficiency, not a performance enhancer

Correct use of leverage: example

Let’s say your strategy uses a 50-pip stop and targets 100 pips:

• Without leverage, you need $100,000 capital to take a 1-lot position
• With 10x leverage, you only need $10,000 to take the same trade
• The strategy’s logic, stop, and target stay the same — only the capital required changes

Conclusion

Leverage does not change your strategy’s win rate — your execution does. Misused leverage creates pressure, overexposure, and emotional interference. But when used responsibly, it simply offers capital efficiency. Your strategy will win or lose based on its edge — not the size of the multiplier.

To learn how to integrate leverage into your trading without wrecking your system — and to scale intelligently — enrol in our Trading Courses at Traders MBA, where we teach you how to trade with power and control.