đ± Liquidation in cryptocurrency futures trading
Margin cryptocurrency trading is highly risky. When you open a position with leverage, the cryptocurrency exchange borrows your money to secure this position, so if the price moves against you, your entire position may be liquidated, and your money will disappear.
âȘïž For example, using 10x leverage means you can control a position size 10 times larger than your actual investment. If you only have $100, your position will increase to $1000, and if the price rises by +1%, you will make $10 in profit instead of $1 without leverage.
âȘïž But this carries a risk; if the price suddenly moves against you and changes by -10%, you will lose all the money in that position.
âȘïž With 25x leverage, the risk of liquidation arises with a price change of 4%, and with 50x leverage, it's only 2%.
âȘïž Thus, the higher the leverage, the greater the risk, but also the greater the proportional profit. I do not recommend setting leverage above 20-25, as the cryptocurrency market is very volatile, and any sudden price change, even for a second, will lead to liquidation and loss of money.
âȘïž To avoid the risk of liquidation, you need to set a STOP-LOSS. In the futures market, a stop-loss is absolutely necessary - at a distance of at least 1% from the liquidation trigger price.
