Definition — When a leveraged position moves against you and LTV climbs toward the warning line, you have three tools: add collateral, sell part of the position, or adjust the leverage ratio. All three push LTV back down; they differ in what they cost, what they preserve, and what they say about your conviction.
The Three Tools, Mechanically
Your LTV is liabilities divided by what backs them — position value plus cash in the isolated account. Each tool attacks a different part of that fraction:
Add collateral — transfer more USDT/USDC into the position. The denominator grows, LTV falls, and your full exposure stays intact. Cost: more of your capital is now committed to the same idea.
Sell part of the position — close a slice; proceeds repay the loan proportionally. Both sides of the fraction shrink, LTV falls, and your exposure is permanently smaller. Cost: you lock in part of the loss and give up recovery on the sold portion.
Adjust leverage — use the Adjust leverage tool to bring the ratio down. Mechanically similar to a partial de-risking, packaged as one action.
When to Use Which
Your situation | Better tool | Why |
|---|---|---|
Thesis intact; move looks like noise | Add collateral | Preserves full exposure for the recovery you expect |
Thesis weakened; you'd not open this trade today | Sell down | If you wouldn't buy it now, don't defend it with fresh cash |
Position simply sized too big for the volatility | Adjust leverage / partial sell | Fix the sizing error, keep the idea |
No spare capital available | Sell down | The only tool that needs no new money |
The honest test before adding collateral: would I open this exact position today at this price? If yes, topping up is a rational defense of a live thesis. If no, adding collateral is throwing good money after a trade you no longer believe in — the most common and expensive mistake in leveraged trading.
Two Rules That Protect You Either Way
Rule 1 — Act at the warning line, not the liquidation line. Every tool works better with buffer left. Waiting until the brink means acting in the market's worst conditions — and a forced close adds the 1% liquidation fee on top.
Rule 2 — Decide the trigger before you open the trade. Choose in advance the LTV at which you'll add, trim, or exit. Decisions made calmly beat decisions made during a drawdown.
On StableStock, every leveraged position shows its LTV, warning line, and liquidation line live, with Add collateral and Adjust leverage one tap away — the tools are fast; the judgment is yours.
Takeaway: Add collateral defends a thesis you still believe; selling down admits the thesis changed; adjusting leverage fixes a sizing mistake. All three beat doing nothing, and all three work best early — pre-commit your trigger LTV, and never top up a trade you wouldn't open fresh today.
Next Steps
Leverage risks explained: LTV, margin calls, and liquidation (Learn)
Interest and repayment: what overnight leverage actually costs (Learn)
For informational purposes only. Not an offer, solicitation, or investment advice. Leveraged trading involves significant risk, including the loss of your entire collateral. Risk parameters vary by stock; live figures in the app take precedence. Services are not available to U.S. persons or residents of restricted jurisdictions (including Hong Kong).
