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Author: Admin | 2025-04-28
Varying leverage ratios when trading Futures. For instance, 10x leverage allows for even more significant gains compared to 5x leverage. However, it also comes with a higher risk of liquidation due to increased volatility.Traders should understand the impact of leverage ratios on their potential profits, losses, and liquidation risk. We’ll delve deeper into these implications in the next section.Types of trades in Crypto leverage tradingIn the world of Crypto leverage trading and margin trading, you can use two main approaches to capitalise on price movements, long trades and short trades.Long tradesEntering a long position with leverage essentially means a trader anticipates a Cryptocurrency’s price to increase. Buy low, sell high. Here’s how it works:You believe the price of a particular Crypto (e.g., Bitcoin) will go up in the future.You enter a long position by using leverage from a Crypto exchange to magnify your potential gains.By using leverage, you gain access to more funds than your initial investment.If your prediction is correct and the price rises, you profit from the difference between your buying price and the selling price.Leverage amplifies your profits. Imagine you buy $1,000 worth of Bitcoin without leverage. If the price increases by 10%, you’d make a profit of $100. However, with 5x leverage and a $1,000 investment, you could control a $5,000 position. In this scenario, a 10% price increase would yield a $500 profit.Short tradesShort positions with allows you to profit from a Cryptocurrency’s price decline. Sell high, buy low. Here’s a breakdown of the concept:You believe the price of a particular Crypto will decrease.You borrow the Crypto asset from the exchange using margin.You immediately sell the borrowed Crypto at the current market price.Later, you close out the trade position by repurchasing the same amount of Crypto. Hopefully at a lower price.If your leveraged trades are correct and the asset price falls, you pocket the difference between the selling price and the repurchase price.Leverage amplifies your profits in short selling. Similar to long trades, leverage magnifies your gains. Let’s say you use $1,000 of margin to borrow and sell $5,000 worth of Bitcoin futures using 5x leverage. If the price falls by 10%, you can repurchase it back for $4500 and return it to the exchange. Your profit would be $500 (excluding fees) on your initial $1,000 margin investment.Open free accountRisks and advantages of Crypto leverage tradingLeverage trading Crypto presents a higher level of risk and reward. While it offers the allure of magnified profits, it also comes with amplified risks. Let’s explore both sides of the coin.Amplified profitsThe core appeal of margin trading lies in its ability to significantly increase your potential gains. Here’s how it works:By using borrowed funds to control larger positions, you
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