$BTC
In trading, leverage is used to amplify high-probability returns, not to give away for free!
Today, a friend told Brother Tian that when he just entered the market in October, he was severely trapped because of leverage!
So Brother Tian found an article about contract leverage sent in 2019. At that time, perpetual contracts were prevalent in the domestic market, and many novices suffered losses because they did not understand the logic behind it.
In perpetual full-margin contract trading, your leverage ratio formula is:
Total value of position / Total amount in perpetual full-margin account = Actual position leverage multiple
The actual position leverage multiple determines how much percentage of market fluctuation you can bear. With an actual position multiple of 20 times leverage on a long position, if the price drops within 5 points, it will liquidate (about 4.5 points). (Part of this acts as a liquidation margin and is not used as actual position margin.)
When the actual position multiple is 50 times, the liquidation price can even reach 1.3 points (the proportion of liquidation margin will increase as your actual position multiple increases = the larger the actual position multiple, the less value you can use as position margin = the higher the risk of the position).
When you reach an actual leverage of 100 times, your actual usable amount is less than 50% of the total amount. If you fall short of 0.5 points, your position will be completely liquidated to zero.
To put it bluntly, in the current market, where BTC can fluctuate nearly two points within 15 minutes, high leverage = giving away for free.
So in the current market, if you do not understand the logic of leverage, do not touch it. Even when using leverage, it is advisable to choose an actual position multiple of no more than 3 to operate.
