He bought #Bitcoin when he was 22
He lost everything with Leverage trading
Ben Won, a 22-year-old who learned the hard way about the risks of leverage trading in crypto.
Ben first got into #Bitcoin in mid-2017 after a friend mentioned it. Without much understanding, he invested $100. During the bull run, his investment grew rapidly, and by January 2018, he had turned $1,000 into $2,000.
Despite the success, he didn’t fully grasp what Bitcoin was and didn’t sell when the price dropped.
Determined to learn more, Won spent months researching Bitcoin through Google, YouTube, and Twitter.
By 2019, he was deeply invested in BTC, putting 95% of his wealth into it.
By early 2020, he had accumulated about 3 bitcoins, a major achievement for him.When COVID-19 hit and Ben was laid off, he decided to explore trading. This is where he encountered leverage trading—a high-risk strategy that magnified both gains and losses.
What is Leverage Trading in Cryptocurrency?Leverage trading involves borrowing funds to increase the size of your trading position. It allows you to control a larger amount of crypto than you could with just your own money. For instance, with 10x leverage, you can control $10,000 worth of crypto by only putting up $1,000 of your own funds.
Here’s how it works:
1. Borrowing Money: You borrow money from a broker to increase the size of your trade.
2. Amplifying Trades: This borrowed money lets you control a larger position than your initial investment.
3. Potential for Bigger Profits: If the trade goes well, you can make more money than if you were trading with just your own funds.
4. Increased Risk: If the trade goes badly, you can lose more money than your initial investment.
Benefits of Leverage Trading
• Increased Buying Power: You can make bigger trades and potentially earn more profit.
• More Opportunities: You can take advantage of small price changes in the market.
Risks of Leverage Trading
• Higher Losses: Just as leverage can increase profits, it can also magnify losses.
• Margin Calls: If your trade loses too much, your broker may require you to add more funds to your account or close your position to limit their risk.
• Debt: If a trade goes very badly, you might end up owing more money than you started with.
ConclusionLeverage trading can be exciting and profitable, but it’s also risky. It’s important to understand both the potential benefits and the dangers before getting started. Always trade responsibly and consider the risks involved.Eager to make the most of his newfound trading time, Ben invested $5,000 using 10x leverage. This meant he was controlling a $50,000 position with only $5,000 of his own money. While this offered the potential for significant gains, it also amplified his risk. Within just two days, the market moved against him, and he lost all his borrowed funds and his own initial investment. By August 2020, Ben had lost all his $BTC and missed out on the bull run he had been anticipating.
ConclusionBen’s experience highlights the dangers of leverage trading. While leverage can amplify potential returns, it also increases the risk of significant losses. It’s crucial to fully understand the risks and mechanics of leverage trading before engaging in it. Always approach such strategies with caution, and consider whether you’re prepared for the potential downsides. #CryptoConcept