Recently, I noticed that many people misunderstand how leverage works. When I opened a 100x leverage position, my actual exposure was less than the full position. Some believe that a 100x leverage order means you're trading with 100 times your initial capital. This is incorrect and can easily mislead by influencers promoting trades. These influencers can suggest trades at any time, regardless of market direction, showing impressive returns without explaining the risks involved. For example, I've seen influencers boast about high returns on a position of less than $10, but the actual profit was minimal.

Let's take a $100 margin as an example. With 100x leverage, you can control $10,000 worth of assets. You have $100, and the exchange "loans" you $9,900. If you fully utilize this leverage, a market move of about 0.7% can liquidate your position, losing your $100 margin to the exchange. However, you don't have to use all the available funds. You can choose to open positions worth $1 (1% of your margin), $10 (10% of your margin), $100 (equal to your margin), or even $1,000 (10 times your margin).

Many influencers who encourage high-leverage trading do so to impress with potential returns, often hundreds or thousands of percent. However, this strategy can easily deceive newcomers. For instance, while BTC and ETH may have minimum position requirements, many altcoins allow positions as low as $1. With 100x leverage on these altcoins, you can spread your $1,000 margin across multiple small positions, reducing the risk of liquidation. This tactic allows influencers to post frequent, seemingly impressive results without substantial risk.

It's essential to understand leverage properly to avoid being misled. High leverage can magnify both gains and losses, so it's crucial to manage your risk and not be swayed by influencers' high-return claims. Always consider the true exposure and potential risk when trading with leverage.

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