🚨A TRADER LOST $10K DUE TO HIGH LEVERAGE TRADING 🚨
In a stark lesson on the dangers of high-leverage trading, a trader lost his entire $10,000 investment by making poor decisions. Here’s a concise breakdown:
Initial Investment:
Initial Capital: $10,000Leverage: 50xEntry Price for $BTC : $73,000
With 50x leverage, he controlled a $500,000 position. A 2% drop from the entry price would lead to liquidation.
Initial Liquidation Price:
73,000−(73,000×0.02)=71,54073,000 - (73,000 \times 0.02) = 71,54073,000−(73,000×0.02)=71,540
Averaging Down:
To avoid liquidation, he added $1,000 when the price dropped to $71,600.
New Total Capital: $11,000BTC Held After Averaging:
(10,000×5073,000)+(1,000×5071,600)≈6.85+0.698≈7.548 BTC\left(\frac{10,000 \times 50}{73,000}\right) + \left(\frac{1,000 \times 50}{71,600}\right) \approx 6.85 + 0.698 \approx 7.548 \text{ BTC}(73,00010,000×50)+(71,6001,000×50)≈6.85+0.698≈7.548 BTC
New Average Entry Price:
540,0007.548≈71,550\frac{540,000}{7.548} \
approx 71,5507.548540,000≈71,550
Final Liquidation Price:
With the new average entry price and considering 50x leverage:
Final Liquidation Price:
71,550−(71,550×0.02)≈70,11971,550 - (71,550 \times 0.02) \approx 70,11971,550−(71,550×0.02)≈70,119
Despite adding more funds, the price dropped to $70,119, resulting in liquidation and a total loss of $11,000. This illustrates the risks of high leverage and the importance of stop-loss orders.
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