🚫🚫 URGENT NOTICE 🚫🚫

If You Trade Futures, Read This

LEVERAGE CAN LEAD TO MAJOR MARKET DISASTERS ⚠️

I've said it many times: "Don't try futures and don't use leverage if you're new to crypto. Even with 3-4 years of experience, please avoid it." But that's not our focus now. This time, I'm explaining how leverage affects crypto market movements. Pay close attention because this is crucial.

First, let's understand leverage.

Imagine you open a trade to buy with $500 and 10X leverage. It acts as if you have $5000 in your account. How? Exchanges (like Binance) lend you $4500. If the price drops by 10% (turning your $5000 into $4500), your position is automatically closed to prevent debt to the exchange. This is known as being "liquidated."

In a long position, when you get liquidated, it creates an instant market sell-off: your remaining $4500 is sold to recover Binance's money.

Now, let's scale this up. Imagine 100,000 traders enter long with 10X leverage on ETH at three levels: $2.8K, $3K, and $3.2K. If the price drops to $2.7K (a 10% drop from $3K), traders get liquidated, triggering massive sell orders and driving ETH's price down further, possibly to $2.5K due to cascading liquidations.

When many traders use leverage, it increases the risk of rapid and strong liquidations, causing "FLASH CRASHES"—moments where ETH can drop 15-20% in minutes. This also happens in traditional finance with banks and hedge funds, but that's another topic.

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