Leverage Is a Double-Edged Sword Initial Capital: Let's say you have $100.

🟢 Position and Leverage: Your total leveraged position cannot exceed $100. For example, if you are using 50x leverage, your margin cannot be more than $2 (since $2 x 50 leverage = $100 total position).

🔴 Liquidation Point: This way, your liquidation point does not occur because your total position is smaller than the total amount.

🔵 Why and when to use leverage?: Using 5x leverage versus 50x leverage essentially means that you are being loaned 5x or 50x your money.

🟢 The problem with high leverage: The problem with high leverage is that if you trade with a position that is larger than your total amount, you will have a liquidation point. But if not, you can be pretty comfortable because you won't get liquidated.

🔴 Trade example: Let's say you open a position with a margin of $1, 50x leverage, so your entire position is $50 and your margin is $1. If the cryptocurrency you chose has increased by 1% since you opened the position, that means you would have made a 50% return on your margin or $0.50. If the cryptocurrency has increased by 10%, you would have made a 500% return on your margin or $5 on your $1 margin.

#Toncoin.#btc#xrp

View translation