💢Very important to know about Leverage

🔔you bear big loss if you not read full post

🔮YOU HAVE MISUNDERSTOOD THE PURPOSE OF LEVERAGE 🚨

🚩You've totally misunderstood leverage: leverage isn't meant to increase your exposure to the market, it's meant to reduce it. Pay close attention, this is very important.

🔟% of beginners think they can use leverage however they want. However, they're taking an enormous risk of total capital loss. 💸 Before diving into an in-depth explanation, let's recap what leverage is.

Leverage is borrowing money from the exchange to make trades. Let's take an example: if you initiate a trade with $100 with 2x leverage, you're putting in $100 of your own and borrowing $100 from the broker. So, your trade will be made with $200, meaning your gains and losses are doubled. If your trade loses 50%, the position will be liquidated because the exchange can't afford to lend to you indefinitely, otherwise, it would incur significant losses. 📉💼

Now, let's understand why you've misunderstood leverage.

When you use leverage, it's to invest, for example, 10% of your capital by only investing 5%, if you use 2x leverage. In fact, leverage is meant to limit your losses (since you can't lose more than 50% with 2x leverage). Also, it's meant to diversify your investments because you allocate a smaller portion of your capital to your trades, leaving a larger portion to be invested elsewhere. 📊🔄

Many beginners believe it will make them earn more: no, it's only supposed to reduce your exposure to the market. Never increase it. It's absolutely crucial that you understand this. ❗🔍

I hope some will understand and implement this advice.

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