Recently, I've observed widespread confusion about how leverage operates. When I opened a position with 100x leverage, my actual risk exposure was considerably lower than the full position size. Many people mistakenly believe that a 100x leverage trade involves using 100 times their initial capital, which is not the case and can be misleading, especially with influencers promoting trades. These influencers often showcase impressive returns without adequately explaining the associated risks. For instance, they might flaunt significant gains from trades with less than $10 at stake, while the actual profit might be minimal.

To clarify, let's use a $100 margin as an example. With 100x leverage, you can manage assets worth $10,000. You start with $100, and the exchange effectively loans you $9,900. If you use the full leverage, a market movement of just 0.7% could liquidate your position, causing you to lose your $100 margin. However, you are not required to use the full leverage. You could choose to open positions worth $1 (1% of your margin), $10 (10% of your margin), $100 (equal to your margin), or even $1,000 (10 times your margin).

Influencers who promote high-leverage trading often do so to highlight potential returns, which can be hundreds or thousands of percent. This approach can easily mislead beginners. For example, while BTC and ETH might have minimum position requirements, many altcoins allow for positions as low as $1. With 100x leverage on these altcoins, you can diversify your $1,000 margin into several small positions, minimizing the risk of liquidation. This strategy allows influencers to present frequent, impressive results without exposing themselves to significant risk.

Understanding leverage accurately is crucial to avoid deception. High leverage can amplify both gains and losses, so it's essential to manage your risk and critically assess any high-return claims from influencers. Always consider your true exposure and the potential risks when trading with leverage.

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