Understanding leverage in crypto trading.

Leverage in crypto trading has been a confusing term within the crypto space most especially for newbies and even for some self acclaimed experts.

The term leverage is ambiguous and that has made it more difficult to get the real meaning in crypto space.

Leverage is also used in forex trading but it will be decided during opening a live account with a broker of your choice.

Life application of leverage is the use of another person’s potential to achieve your aim.

If you are to do it by yourself, you did not have the idea but rather than to leave it and move on, you decide to leverage on another person’s idea and creativity.

What is leverage?

In a financial setting, leverage is the use of borrowed funds in trading with the aim of making profit.

Who else wants to lose their money?

No one but the same way, leverage helps in making more profit, it also results in greater loss if the trade went otherwise.

Leverage in crypto trading

In crypto trading, leverage works more in future trading which is the prediction of the market price.

In future trading, you are opening a position on whether the price will rise or fall.

If the price goes in your direction, you earn profit and you lose your money if your prediction goes wrong.

Assuming you want to buy btc but you only have $100. 

You can decide to choose a leverage option between 5x and 100x (the leverage option might differ from trading pair to trading pair and from exchange to another).

Based on your analysis (technical or fundamental or sentimental), you believe that the price of btc will increase, so you buy.

Rather than buying with $100, you used 10x leverage meaning you are now buying $1000 worth of btc while you use your own $100 as margin.

Margin is the specified amount of money that must be held for holding a position.

If the price of btc increases by 10%, you will be making $100 if you used 10x leverage.

On the other hand, if you had used your $100 without any leverage, at the same increase, you will be making $10.

Oh! That’s cool

What if the trade goes against me?

Assuming the price of btc decreases by 10% after you bought, you will be losing $100 if you are using 10x.

Instead, if you are not using any leverage, you lose $10 while your $90 will remain intact.

Leverage trading is a high risk trading which is why buying low and selling high is more and more advisable.

With kurepay, you can easily buy with fiat and sell at your convenience with any hidden charges.

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