$BTC $BONK $FET
š“ UNDERSTAND HOW LEVERAGE RUINS EVERYTHING š“
Welcome to the world of crypto trading! When youāre trading with 10x leverage using $500, it means youāre borrowing funds to increase the size of your position. If you have a $500 position with 10x leverage, youāre effectively controlling a $5000 position.
š“ Leverage Explained:
Entry Price: The price at which you enter the trade.
Leverage: With 10x leverage, you control a position ten times the size of your initial capital.
Liquidation Price: The critical price level where your position is at risk of being closed by the exchange.
š“ Liquidation Risk:
Maintenance Margin: Typically around 2.5%. If the price drops and your position loses more than this value, youāre at risk of liquidation.
Impact of a 10% Drop: A 10% price drop can lead to liquidation, not just losing your initial $500, but your entire position could be wiped out.
š“ How It Works:
Entry Price: Suppose you enter at $0.45.
Leverage: Using 10x leverage.
Liquidation Price: For 10x leverage, a price drop to $0.405 can trigger liquidation due to the leverage multiplier.
š“ Example:
If the maintenance margin requirement is 2.5%, a price drop that reduces your positionās value by that percentage will trigger liquidation.
Stay cautious, understand the risks, and avoid excessive leverage to protect your investments!