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The driving force behind the flash crash: revealing the impact of leveraged trading!

If you are a futures trader, then you have to read this article carefully!

Leverage, this guy is a killer in the market, novices should never touch it.

Even if you have been in the field of cryptocurrency for several years, you have to be careful. But today I will not talk about this. I want to talk about the impact of leverage on the trend of the crypto market. This is heavy content, don't miss it.

Let's talk about how leverage works first. For example, if you use 10x leverage and open a position with $500, it is like you have $5,000 in your hand. The exchange will lend you $4,500, but if the price drops by 10%, your $5,000 becomes $4,500, then your position will be automatically closed, which is "liquidation".

At the time of liquidation, your $4,500 is sold, and the exchange takes the money back. Once this happens, there will be a large number of sell orders in the market, and the price will fall sharply.

Imagine that 100,000 traders all bought ETH with 10x leverage at 2.8K, 3K, and 3.2K. If the price drops to 2.7K, the traders who entered at 3K will be liquidated, and a large number of sell orders will emerge in the market, and the price of ETH may collapse and further fall to 2.5K. This is the so-called cascading liquidation.

If too many people use leverage, the market is prone to big problems, such as "flash crashes", ETH may plummet 15-20% in a few minutes. This is the same as banks and hedge funds in traditional finance using leverage. #MegadropLista #BTCā˜€ļø #ETH大ę¶Ø #ēƒ­é—ØčƝ题

So, be careful with leverage when playing futures, and don't play yourself into it.

Finally, if you feel helpless and confused in trading, want to know more about the cryptocurrency circle and get first-hand cutting-edge information, ambush 100x coins in advance, check the top posts, and you are always welcome to discuss with us. There are only a group of like-minded partners gathered here. Our common goal is to work together to reach the pinnacle of wealth!