What is leverage, and why can it wipe you out in minutes?
Leverage lets you trade with more capital than you have: x10 means that with 100 dollars, you control 1,000. It sounds tempting, but it works both ways.
If the market moves 10% in your favor with x10, you double your money. If it moves 10% against you, you lose everything. You get liquidated. It doesn’t take a crash: in crypto, a 10% move is normal.
Liquidation isn’t the only problem. Volatility can knock you out of the game before your thesis plays out. You can be right about the direction, but if there’s a sharp spike (a wick, a cascade of liquidations), your position is gone.
Experienced traders use low leverage (x2, x3) for very clear setups, never as a rule. If you’re learning, trading without leverage will teach you more and keep you in the game for next time.
Follow us for more guides and no-nonsense analysis.
#Leverage
Leverage lets you trade with more capital than you have: x10 means that with 100 dollars, you control 1,000. It sounds tempting, but it works both ways.
If the market moves 10% in your favor with x10, you double your money. If it moves 10% against you, you lose everything. You get liquidated. It doesn’t take a crash: in crypto, a 10% move is normal.
Liquidation isn’t the only problem. Volatility can knock you out of the game before your thesis plays out. You can be right about the direction, but if there’s a sharp spike (a wick, a cascade of liquidations), your position is gone.
Experienced traders use low leverage (x2, x3) for very clear setups, never as a rule. If you’re learning, trading without leverage will teach you more and keep you in the game for next time.
Follow us for more guides and no-nonsense analysis.
#Leverage