Mastering Leverage: What "Cross 100x" Means on PERPTools

Decentralized perpetual traders understand that leverage is the ultimate double-edged sword. While it is often marketed as a way to "maximize gains," leverage is fundamentally a tool for capital efficiency, allowing you to control significant market exposure with only a fraction of the total value as a deposit.

On the PERPTools interface, you will notice a prominent setting in the execution sidebar: Cross 100x. To the uninitiated, this looks like a "profit multiplier." To the professional trader, it is a tool for capital efficiency that requires strict discipline. Here is everything you need to know about how leverage and margin work on PERPTools.

Leverage: Breaking Down the Terminology

When you trade on PERPTools, you aren't just selecting a multiplier; you are interacting with two distinct concepts: Cross Margin and 100x Leverage.

• Cross Margin: In this mode, your entire available USDC balance in your trading account acts as collateral for your positions. If one trade goes into a loss, it draws from your total pool of funds to stay open. This reduces the chance of an early liquidation but puts your entire balance at risk if the market moves significantly against you.
• 100x Leverage: This indicates your maximum buying power. With 100x leverage, a $100 deposit allows you to control a position worth $10,000. In fact, PERPTools does offer more than one option of leverage, ranging from 1x to a maximum of 100x. Traders can also customize their positions with whatever number of leverage they find suitable. 

The Math of 100x: Gains vs. Liquidation

Leverage amplifies price movements. While it makes small price changes profitable, it also makes the "Liquidation Price"—the point at which the exchange automatically closes your position to prevent a total loss—extremely close to your entry price.

Let's look at the math for a $3,000 ETH position:

• At 1x Leverage: ETH must drop to $0 for you to be wiped out.
• At 10x Leverage: A 10% drop in ETH price results in a 100% loss of your collateral.
• At 100x Leverage: A mere 1% move against you results in a 100% loss of your initial margin.

Using the PERPTools Widget Safely

When you look at the PERPTools execution panel, you'll see the Est. Liq. Price update in real-time as you adjust your order size.

Instructor Tip: Never place a trade without looking at the Est. Liq. Price. If that price is within the "noise" of daily volatility (e.g., only 0.5% away from the current price), your trade is at high risk of being closed by a temporary spike.

When you want to place a “Cross”, keep in mind the following due diligence: 

1. Don't "Max Out": Just because the selector says 100x doesn't mean you should use 100% of your buying power. Use the slider to allocate only a small portion of your balance to a single trade.
2. Monitor "Available" Funds: Because you are in Cross mode, keep an eye on your Available USDC. If this hits zero because of unrealized losses, your positions will begin to liquidate.
3. Set a Stop Loss (SL): Always toggle the TP/SL switch in the PERPTools widget. A Stop Loss ensures you exit the trade on your terms before the exchange's liquidation engine does it for you.

Best Tactics for Due Diligence: The Golden Rule

Leverage is a tool to increase capital efficiency, not a gamble to get rich overnight. On PERPTools, Cross 100x gives you the flexibility to open multiple positions using one pool of collateral, but it demands that you respect the math of liquidation.