đ„NEW TRADERS, UNDERSTAND THIS BEFORE TRADING! đ„
Leverage: The Sweet Poison in Crypto Trading
Imagine being told you can turn your $100 into $1,000 instantly. Sounds great, right? But this magic trick can turn into a nightmare faster than you think.
# Breaking It Down: How Leverage Works
For simplicity, letâs use the current prices of Bitcoin ($67,500) and Ethereum ($3,200).
10x Leverage
- You have $100.
- With 10x leverage, youâre trading $1,000.
- If Bitcoin moves 1% ($675), your position changes by $67.50.
- A 1% move either gains or loses you $67.50â67.5% of your capital. A 10% move wipes you out completely.
100x Leverage
- You have $100.
- With 100x leverage, youâre trading $10,000.
- If Ethereum moves 1% ($32), your position changes by $320.
- A 1% move either gains or loses you $320â320% of your capital. A 0.5% move erases your funds.
# The Ugly Truth: Leverage Doesnât Boost Your Profits
Leverage doesnât increase your profit amount; it just boosts the percentage gain.
Without leverage, a 1% gain on $1,000 nets you $10. With 10x leverage on $100, the same 1% gain still nets you $10.
The profit remains the same, but the risk skyrockets.
# Isolated vs. Cross Margin
Isolated Margin:
- Limits your risk to the specific trade.
- If the trade goes bad, only the margin in that position is affected.
Cross Margin:
- Shares margin across all your positions.
- If one trade fails, it can drag down your entire account.
The Harsh Reality
Leverage feeds on the greed of small retail traders with portfolios under $200, dreaming of quick wealth. But leverage is a trap that often leads to disaster.
Leverage is a dangerous illusion. Stay disciplined, manage your risks, and avoid the high-leverage bait.
Smart trading is about steady growth, not fast gambling.
#RiskManagement #binancelearntoearn #Bitcoin_Coneference_2024 #TradingMadeEasy
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