Many newbies in the cryptocurrency circle, even veterans, have never figured out the difference between high leverage and low leverage, or they are afraid of high leverage, thinking that high leverage is the root of all evil and the source of your liquidation. Moreover, many big Vs only tell you not to use high leverage, and never mention position management, nor do they tell you that the root cause of your liquidation and loss of a lot of money has nothing to do with leverage, but is directly related to your position. Leverage, I always trade with full leverage.
I meet too many cryptocurrency fans every day, and I find that 99% of them don’t understand the logic behind it. Today I will talk about the basic logic behind it, so that everyone can understand that it doesn’t mean that high leverage is the reason why you lose money or get liquidated, or that it has nothing to do with it. Many people just listen to what others say, and say that they are scared when they see that the leverage is so high, and they don’t really think about what the principle is.
To make this clear, let's take an example:
For example, if the current price of a bitcoin is 10,000 USD, and I open a contract for one bitcoin with 100x leverage and 2x leverage respectively, the same position, if the stop-loss is 200 points. If the price rises or falls by 200 points, the profit or loss is 200U. No matter whether you use 100x leverage or 2x leverage, the result is actually the same. The profit or loss is the same. So the leverage you open has nothing to do with how much money you make or lose.
What really matters is your position management. The role of position control is to magnify your funds. For example, now Bitcoin is 10,000 US dollars per coin, and I only have
100U, then if I want to open a Bitcoin contract, I have to open a 100x leverage, which is equivalent to a full position transaction. Leverage has nothing to do with it. If Bitcoin rises or falls by 100 points, you will also lose or gain 100U. It is easy to get liquidated because you are fully position transaction, of course it is easy to get liquidated. If I only have 100U, I still open a 100x leverage, but I only open a position of 0.1 Bitcoin. If you want to get liquidated, Bitcoin must rise or fall by 1000 points.
To put it another way, if you have 100U now and you open a double leverage, that is, your 100U position is doubled, which means you can open a maximum position of 200U. In other words, the maximum you can open is 0.2 bitcoins. What if you still only open 0.1 bitcoins? In other words, if you want to get liquidated, Bitcoin has to rise or fall by 1,000 points.
From here, we can see that if you open 100x leverage and 2x leverage, your gains and losses are exactly the same for the same rise and fall. Do you understand? It is not the high leverage that makes you prone to liquidation, but your position that makes you prone to liquidation. Therefore, whether you are prone to liquidation is directly related to your position. For example, I have 10,000U, I open 100x leverage, but I only open a position of 0.1 Bitcoin? My position is very small. Although I use high leverage, in order for me to be liquidated, Bitcoin must rise or fall by 100,000 points. I will be liquidated. Let alone opening 100x leverage here, even if I open 10,000x leverage, but I only open a position of 0.1, the gains and losses are exactly the same, just like you open 2x leverage, there is no difference, that is to say, if I open a long Bitcoin contract, I have no liquidation price. Because Bitcoin is only 10,000 US dollars now, how can it fall by 100,000 points?
But you have to understand this principle. The level of leverage has nothing to do with your profit or loss. Instead, it reminds you that position management is what you should focus on. Many people only focus on leverage and ignore position management, which leads to liquidation again and again. Don't be misled! Because too many people, or basically most people, have misunderstood the principle of leverage. Many people are terrified of high leverage. Only when we understand the principle here can we better allocate our positions. Only then can you understand that high leverage is not the culprit. Only then can you better understand that what really affects your profit or loss is position management. This is the real culprit. Therefore, if you don't want to be liquidated, managing your position is the top priority. #新币挖矿CATI #新币挖矿HMSTR #比特币年底能否突破10万美元？
