### Margin Trading Example: Long and Short Positions with 25x, 5x and 125x Leverage on BTC
In margin trading, it is possible to open long (buy) and short (sell) positions on BTC by using different leverage rates. Here are examples of trades using 25x, 5x and 125x leverage:
**25x Long Position:**
- The investor deposits collateral worth 1 BTC and uses 25x leverage.
- In this case, the investor's position size becomes 25 BTC.
- Purchases are made when the BTC price is 10,000 dollars.
- If the BTC price increases by 4% ($400), the investor's position value increases to $10,400.
- Earnings: 25 BTC x 400 dollars = 10,000 dollars.
- Profit rate with collateral: 10x (10 times the collateral).
**5x Short Position:**
- The investor deposits collateral worth 1 BTC and uses 5x leverage.
- In this case, the investor's position size becomes 5 BTC.
- Selling is done when the BTC price is 10,000 dollars.
- If the BTC price falls by 10% ($1,000), the trader's position value drops to $9,000.
- Earnings: 5 BTC x $1,000 = $5,000.
- Earnings rate with collateral: 5x (5 times the collateral).
**125x Long Position:**
- The investor deposits collateral worth 0.1 BTC and uses 125x leverage.
- In this case, the investor's position size becomes 12.5 BTC.
- Purchases are made when the BTC price is 10,000 dollars.
- If the BTC price increases by 1% ($100), the investor's position value increases to $10,100.
- Earnings: 12.5 BTC x 100 dollars = 1,250 dollars.
- Earnings rate with collateral: 12.5x (12.5 times the collateral).
**125x Short Position:**
- The investor deposits collateral worth 0.1 BTC and uses 125x leverage.
- In this case, the investor's position size becomes 12.5 BTC.
- Selling is done when the BTC price is 10,000 dollars.
- If the BTC price falls by 1% ($100), the trader's position value drops to $9,900.
- Earnings: 12.5 BTC x 100 dollars = 1,250 dollars.
- Earnings rate with collateral: 12.5x (12.5 times the collateral).
