How does leverage Crypto trading work?

At first, we want to note that using leverage is a prime example of advanced trading, which requires particular skills and knowledge, while trading on the spot is rather investing, which provide lower risks and suit newbies. For better understanding, let’s get familiar with the leverage definition.

What is leverage?

Leverage is an investment technique of using borrowed money, precisely, the use of different financial instruments or borrowed capital to maximize an investment’s potential return. Also, leverage may refer to the amount of debt a firm uses to fund assets. You should keep in mind that leverage will also multiply the potential downside risks in case the crypto coin of your choice goes down.

Advantages of leverage trading

• Increase profit

Don’t limit yourself with your deposit on the spot, borrow money to increase your profit. For example, by going long with leverage x2, you can double your expected profit. 

• Opportunity to go short

On margin and futures trading you have an incredible opportunity to earn even on a bearish market when everything is falling when everyone is ruled by fear. Go short with any leverage you want within the cryptocurrency exchange platform’s capabilities, but consider the risks, which we explained below. 

• Diversification

Diversify your trading portfolio by trading on different platforms using leverage. Going short will be a great solution to cover losses caused by a liquidated long position. 

Are you a newbie, and the cryptocurrency world seems challenging for you? Don’t worry, we have a solution for you, which requires no skills and knowledge – Binance and Bitmex signals, provided by experienced SublimeTraders. Check out the info below to learn more and start making money right now. 

How does Bitcoin leverage work

How to buy Bitcoin with leverage? Suppose you want to buy two BTC with the actual price of $30 000, but have not enough money. And you decided to go long with the 2X leverage and buy two Bitcoins, expecting it to rise. After some time, Bitcoin price goes up 10%, and your deposit value turned to $66 000. You should subtract the borrowed money ($30 000) to calculate your reward – $6000, without deducting fees. Without the leverage trading feature, your earnings would be two times lower.

On the other hand, if the market goes in the wrong direction, and Bitcoin’s price goes down to $25 000, the overall cost of your funds is now $50 000, but you still have to pay back $30 000 to the exchange. The bad news is you’ve lost $10 000 of your own funds. That’s why leverage trading is dangerous.

In summary, despite the pros of leverage trading, you should realize that your whole deposit can be burned quickly in volatile markets, making this technique unsuitable for newbies. 

Despite the risk, while using high leverage, you can become rich only after one successful order, but you should consider proper risk management, which will help you to keep your assets safe and nerves healthy. We prepared for you some leveraging cryptocurrency must-have tips for dummies:

• Use limit orders. Stop Loss and Take Profit will help you to take your profit and prevent you from losing more than you expect. 
• Consider the liquidation point. While opening a long or short position, stay sharp and monitor the cryptocurrency price to prevent it from reaching the liquidation point. Here comes a solution – to average BTC position by buying more assets for a lower price, and liquidation point will move farther. 
• Wait for the breakdown or breakout. Before going long or short, wait to break the support or resistance levels, which can be an excellent signal to enter. 
• Put your emotions aside. It is essential to put your emotions aside to prevent panic sales and to use extremely high leverage, which may lead to the burning of your money even during a couple of hours. Trade wisely, consider all the possible situations, and always stay sharp. 

Best exchange platforms to leverage cryptocurrency

• Binance is the biggest cryptocurrency platform by daily volume and transactions per second, more than 300 coins provided and maximum possible leverage up to x125. 
• Bybit is a derivatives exchange platform with (no server downtime) maximum possible leverage up to x100.
• FTX  is a cryptocurrency derivatives exchange built by traders with provided wide variety of indices and leveraged tokens that can be traded on the futures or options market with maximum possible leverage up to x101. 
• Prime XBT is a popular Bitcoin-based trading exchange that also allows speculating on traditional financial products with leverage up to x1000. 
• BitMEX is a popular cryptocurrency trading platform that provides high leverage contracts with margin trading up to x100. 

Cryptocurrency trading with Bybit, Binance, and BitMex signals

Even after many years of practice, studying technical and fundamental analysis, you still consider yourself not confident enough about leveraging BTC or have no skills in cryptocurrency trading? We have a solution for you – Binance and Bitmex crypto signals, which will let you trade like a king both on bullish and bearish markets. Buying a monthly subscription will have access to the endless flow of signals to trade on spot, margin, and futures, which will help you to choose what to buy when to buy, and where to sell. 

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