With 30x leverage, can a drop of less than 3% wipe you out? The problem is your position size, not the leverage.
Last night, a buddy sent me a voice message. He went long with 10,000 USDT at 30x leverage, and a slight market pullback wiped out his account. I checked his trades: he’d put almost all 9,500 USDT into the position and hadn’t even set a stop-loss.
A lot of people focus only on the leverage multiplier and forget that position size and margin are what really matter.
Don’t put most of your money into one trade. Having 10,000 USDT doesn’t mean you should use over 9,000 every time. The higher the leverage, the larger your position—and the smaller the market move you can withstand.
Before entering a trade, work out the maximum you’re willing to lose. For example, if you’re only willing to lose 200 USDT on a single trade with 10,000 USDT, calculate your position size based on the distance to your stop-loss. Don’t go all in first and then bet that the market won’t reverse.
A stop-loss is just as essential as having a clear view of the market. If the trend isn’t clear, trade less. If a breakout fails, get out. In a range-bound market, don’t chase the price. And if you take a loss, don’t rush to add to your position to win it back.
Also, cross margin and isolated margin work differently. Cross margin can use more of your available margin, but that doesn’t make it safer. The liquidation price is also affected by maintenance margin and fees.
When trading futures, leverage determines how large a position you can open, but position size and stop-losses determine how much risk you’re taking.
Last night, a buddy sent me a voice message. He went long with 10,000 USDT at 30x leverage, and a slight market pullback wiped out his account. I checked his trades: he’d put almost all 9,500 USDT into the position and hadn’t even set a stop-loss.
A lot of people focus only on the leverage multiplier and forget that position size and margin are what really matter.
Don’t put most of your money into one trade. Having 10,000 USDT doesn’t mean you should use over 9,000 every time. The higher the leverage, the larger your position—and the smaller the market move you can withstand.
Before entering a trade, work out the maximum you’re willing to lose. For example, if you’re only willing to lose 200 USDT on a single trade with 10,000 USDT, calculate your position size based on the distance to your stop-loss. Don’t go all in first and then bet that the market won’t reverse.
A stop-loss is just as essential as having a clear view of the market. If the trend isn’t clear, trade less. If a breakout fails, get out. In a range-bound market, don’t chase the price. And if you take a loss, don’t rush to add to your position to win it back.
Also, cross margin and isolated margin work differently. Cross margin can use more of your available margin, but that doesn’t make it safer. The liquidation price is also affected by maintenance margin and fees.
When trading futures, leverage determines how large a position you can open, but position size and stop-losses determine how much risk you’re taking.
