Do you really know how to calculate leverage in the crypto world?

5x leverage allows you to use 100 yuan in capital, borrowing 400 yuan, for a total of 500 yuan for trading, thus amplifying profits.

If you use 40,000 yuan for 5x leverage to buy 100 bitcoins, and the price rises to 3,000 yuan, the profit would still be 100,000, but the profit rate can reach 250%.

Compared to the 50% return from spot trading, contract trading allows for the same return with less capital, making capital utilization more efficient.

However, leverage also means risk; when prices fall, losses will be magnified. To avoid liquidation, it is essential to set take-profit and stop-loss levels reasonably and to timely replenish margin in order to find a balance between high returns and risks.

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