Leverage Calculator
The multiplier, in both directions, after borrowing costs.
Work out Leverage. The multiplier, in both directions, after borrowing costs. The move that wipes you out, alongside the move you hoped for.
From your broker's schedule — rates are tiered and move with the benchmark.
Leverage multiplies losses exactly as it multiplies gains, but only the loss side has a floor you can reach. Nothing here is advice about how much to use — what it calculates is the move that wipes you out, which is the number worth knowing before opening the position.
Return on equity after costs
18%
2.00× leverage on a 10% move
Leverage of 2.00× turns a 10% move into 20% before costs. It does the same in reverse — -22% on an equal fall, and a 50% fall removes your capital entirely. The margin call arrives before that point, not at it.
How the Leverage Calculator works
Leverage multiplies the percentage move by the leverage ratio and then subtracts what the borrowing cost. The asymmetry people miss is not in the multiplier but in the endpoints: at four to one, a 25% fall removes the entire stake, while no rise returns the stake twice over at that same distance. The loss side reaches total before the gain side reaches double.
Also known as: stock leverage calculator · leverage ratio calculator · margin leverage calculator · leverage calculator stocks
The calculation itself
Leverage is position size divided by your own capital. The return on capital is the percentage move multiplied by that ratio, less the cost of the borrowing.
The move that wipes out the capital is simply the capital's share of the position: at 2:1 that is 50%, at 4:1 it is 25%, at 10:1 it is 10%.
In practice the margin call arrives before that point, so the wipeout figure is a boundary rather than a forecast — what actually happens first is the forced sale.
In practice
$10,000 of capital in a $20,000 position is 2:1. A 10% rise produces $2,000 of profit, which is 20% on the capital.
Held 90 days at 8%, the $10,000 loan costs $200, so the net return is 18% rather than 20%. The same move against you is −22% — the interest adds to the loss instead of subtracting from the gain.
That asymmetry is worth stating plainly: costs make the downside worse and the upside smaller, so leverage is not a symmetric bet even before the call risk enters.
Push the holding period out and it gets starker. A 0.5% rise held for a year at 12% produces a negative return despite the position being up — the interest exceeds the gain outright.
The asymmetry people miss
Leverage is usually described as cutting both ways, which understates it. At 4:1 a 25% fall removes everything. There is no 25% rise that returns the stake twice over — the loss side reaches total while the gain side is still merely proportional.
The floor also matters more than the multiplier. A 50% fall followed by a 100% rise leaves an unleveraged holder where they started; a leveraged holder who was called out at the bottom does not participate in the recovery at all.
Which is why the useful questions are not about expected return. They are: what move triggers the call, what move removes the capital, and could I sit through the first without being forced out.
Where the figure deceives
This models a single move over a single period. Real prices oscillate, and leverage interacts badly with volatility — a position can be called out on a drawdown and miss a recovery that would have made the whole thing profitable.
It also assumes you keep the position. In practice the call decides that, and the call comes before the wipeout, so the real risk boundary is tighter than the arithmetic here suggests.
Margin leverage is not the same as a leveraged ETF, futures or options. Those carry daily rebalancing decay, expiry and premium respectively. Same word, different failure modes.
Nothing here is advice about how much leverage to use. What it calculates is the move that wipes you out, which is the number worth having before the position exists rather than after.
Acting on it
Start from the drawdown you could tolerate and work back to a size, rather than starting from a size and hoping.
Include the interest over your actual holding period. Short-term leverage barely notices it; anything held for months does.
Check the call price alongside the wipeout move — the first is what will actually happen, and it is always the tighter of the two.
Not financial advice. This calculator is for planning and illustration, not financial advice. Real products carry fees, taxes, and terms it does not model. Confirm figures with your lender or a qualified adviser before committing.
Frequently asked questions
How does leverage affect returns?
It multiplies them. At 2:1 a 10% rise is a 20% return on equity and a 10% fall is a 20% loss, before interest. The multiplier applies identically in both directions — what differs is that losses have a floor you can hit.
What price move wipes out my equity?
A fall equal to your equity as a share of the position. At 2:1 that is 50%; at 4:1 it is 25%; at 10:1 it is 10%. In practice the margin call arrives well before that point.
What leverage is safe?
There is no safe figure independent of what is held and for how long. What is calculable is the move that wipes you out and the move that triggers a call — deciding whether you could sit through both is the actual question.
Does interest change the picture much?
On a short hold, barely. On a long one it can consume the entire gain: a modest rise held for a year at a high rate can produce a negative net return despite the position being up.
Is leverage the same as margin?
Margin is the mechanism; leverage is the result. Borrowing on margin produces leverage, but so do futures, options and leveraged funds, each with different costs and different ways of going wrong.
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