Some Risks of Leverage in Crypto Trading

[Suba]

Leverage refers to trading using borrowed funds from an exchange or broker, allowing traders to leverage more than their own capital in the hope of increasing profits. For example, as a novice trader, if we use 10x leverage, if we have $100 in trading capital, we can open a position worth $1,000.
Then, we decide to use all our buying power by opening a long BTC position. If the BTC price rises 10%, we will profit $100. However, if the BTC price falls 10%, we will lose all our capital, or $100. This loss is known as liquidation, or the loss of all capital.

Disadvantages of Leverage
1. Losses are directly proportional to the level of profit.
2. Margin calls, where traders receive a warning from the broker to immediately increase capital.
3. Complexity, requiring skill and a sound risk strategy.

 

[Starmix]

I'm allergic to trading. I promised myself not to entertain it after losing a huge capital. It's only good for a skilled trader like brokers. I wish I could be a skilled crypto trader. I will surely resign from work and concentrate on this. Many became millionaires because of crypto trading.

 

[Suba]

Crypto exchanges often act as brokers to bring together buyers and sellers, especially in OTC trading. Brokers and crypto exchange employees are prohibited from trading on their exchanges, such as a Binance insider trader who was known to other traders and was eventually fired.

 

[serki777]

Leverage is like a double-edged sword. It can grow your account fast, but it can also wipe you out even faster.