What Is the Relationship between Leverage and the Initial Margin Percentage?

Leverage and the Initial Margin percentage have an inverse and direct mathematical relationship. The Initial Margin percentage is calculated as 1 divided by the leverage ratio.

For example, 50x leverage requires 2% Initial Margin (1/50). The higher the leverage chosen, the smaller the required Initial Margin percentage, meaning less capital is needed to open the position, but the liquidation risk is much higher.