Leverage

The primary benefit of leverage is to allow you to keep less money on an exchange while still trading your usual size. It is a tool to limit your exposure and risk.

Liquidation % = 100 / Leverage

So, if you use 20x leverage, you get liquidated at 100/20 = 5%

That is, if price moves 5% away from your entry, you lose your initial margin.

The best way to use leverage then, is to decide on where you are wrong on the trade. This is done using some technical level, be it a recent swing point, a consolidation, an EMA, whatever.

You see what % this level is away from your entry, and then you do the reverse calculation

Leverage = 100 / % away from price where you're wrong.

Entering trades where invalidation is tight, and clear then enables you to use more leverage.

Leverage then is a function of your initial margin and the distance in % to your stop-loss.

To calculate profit or loss, the calculation is;

Profit or Loss = (Initial Margin) x (% price movement) x (leverage)