Leverage trading

[nattekut]

This is a gambling community. Do you guys consider leverage (margin) trading as gambling or as a real trading method.

For those who do not know margin trading. Simply explained its a way of trading where you can trade for example 1BTC but only put 0.01BTC of your own money at risk. The only catch in leverage trading is the higher the leverage the more risk you take to loose money. 

there are some fees taken into account but I will explain a little more simplistic.

Imagine you have 100$ and lets say BTC is @ 10,000$ Lets say BTC increases with 1% you make 1$ profits if you trade your 100$ in BTC. 

Lets say I am not happy making 1% and I want to make more profits but not by risking more of my own money. Then leverage/margin trading is coming in the front.

Lets say I want to trade 1000$ BTC but I am only willing to risk 100$ then I can do a 10x leverage trade on a long position . By doing a 10x leverage you actually borrow money from the platform and put your own 100$ at stake in return. by doing a long you predict BTC price will go up. 

Now we take the same example. BTC goes up 1% to 10,100$. this means you also make 1% profit or 10$ on the 1000$ contract value. But if you compare this to your own risked amount you made 10% profits. You earned 10$ on your own 100$. So you risked the same amount but with the leverage trading you made more profits according to your balance.

 

BUT there is a more darker side on leverage trading and people get caught by that very regularly. You borrow money from the platform so they also want something in return if the trades goes into the wrong direction. Lets say you go long (price moving up) But price is moving down. Then the amount you put at risk is used to cover the losses. Lets say you do a leverage trade of 10x on 100$ when BTC is 10,000$ and lets say BTC goes down 1%. This means that you already lost 10% of your 100$. So it is not unusual BTC fluctuates 10% or more. Imagine that BTC drops 10%. This will mean that you make a loss of 100$ on your 1000$ position and your position will be liquidated and you end up with a zero balance. If you just would have traded the 100$ in normal trading you would be down 10$.

 

So do you guys think leverage trading is gambling or do you think that it can make good money if you are a skilled and experienced trader with a good knowledge about technical analysis.

I personally love margin (leverage) trading. I used to do this on non crypto markets like for example gold and I am still doing so. I had some losses like every trader but overall it made me very good money so far. 

Do you think you a crypto trader with a gambling history would faster enter the leverage trading or not?

[BLXN]

Sounds like the basis for the site we're on-- with a little twist. :v

[nattekut]

1 minute ago, BLXN said:

Sounds like the basis for the site we're on-- with a little twist. :v

Yeah lot of people compare leverage trading with gambling on a 2x multiplier. Actually leverage trading is guessing wether the price will go up or go down. If you long you 'gamble' on the price going up. If you short you 'gamble' on the price to go down. And depending on which leverage you take you risk a certain amount of your own money. Actually you risk all your money in a leverage trade but depending on which leverage you take the risk increases.

• with a 100x leverage trade you risk to loose your balance if BTC drops with only 1%
• With 10x leverage you loose your balance if BTC drops 10%
• ....

[BLXN]

31 minutes ago, nattekut said:

Yeah lot of people compare leverage trading with gambling on a 2x multiplier. Actually leverage trading is guessing wether the price will go up or go down. If you long you 'gamble' on the price going up. If you short you 'gamble' on the price to go down. And depending on which leverage you take you risk a certain amount of your own money. Actually you risk all your money in a leverage trade but depending on which leverage you take the risk increases.

• with a 100x leverage trade you risk to loose your balance if BTC drops with only 1%
• With 10x leverage you loose your balance if BTC drops 10%
• ....

I seem to recall the recall of margin loans was the basis for the credit crisis in '29.
risky business.. I might have been interested at some point, but Stake is a pretty stable medium for risk, and I would wager my dollar on that.
Perhaps if I had money to burn -or more to burn lol- i might consider a route like this -- out but at this point if I had saved carefully, and gambled in small amounts instead indulging the pursuit of large amounts, I'd have the kind of money I need right now perhaps this is suited more for those vetted in trading.

[cryptofly]

I have been trading for a while in almost all exchanges available, now I have signed in Bitmex (about 6 months ago) and I am doing my deep, very deep research on what is about leverage and margin trading.  I`m almost ready, just need to find the momentum to take those leverage levels to work for me.  Yes, many others takes leverage as a gambling site with huge and large chances of being bust, but many traders are doing pretty good by taking positions they can control.  The all ecosystem is full of scammers, even big and solid exchanges were or are going to scam users.  Everything is a gambling like.  When this will finish?  Easy, when mass adoption takes a nice lead, when devs finished lightning networks, when dApps clearly takes a part of sharing pieces with a regular Apps,and so.  Meanwhile I'm learning by reading books, watching videos or channels and by reading news in CT....yes, Bitmex forums are a very helpful tool to ask questions.  Good luck. 

[williamshennie9]

Leverage in trading can be a blessing or a curse. I mean, all it does is give you more exposure to the market. So if you lose, your losses are more, and if you win, then your profits are greater.

[nattekut]

Yes I agree leverage trading can be a curse but it can also make insane benefits. I am still in the research process for leverage trading in crypto. I have been doing this for many years now in other markets but crypto is much more volatile so I need to find myself the best strategy. So at this moment I am only testing with about 40-50€ and play a little around.

Yesterday I had my first decent hit.

I placed a short (predict price comes down) order around 10695$ and I used 0.001BTC (10$) on a 100% leverage which gave me a position of 1000$. The liquidation price was around 50$ more so very tricky to get liquidated. so decided  to add 0.0025BTC more to increase my margin. by doing this the liquidation price increased to 11,195$ which gave me much more room to play around.

So this was the result

I got into a short at 10,695$ and position closed at 10,545$. So we can say that between opening and closing this position BTC moved around 1.5% Its a 150$ difference. So if I would have used my 0.001BTC order in a regular trade I would have made 0.000015BTC profit or about 0.15$. But by taking this position with a 100x leverage I had a 1000$ position. I made 1.5% profits on that position so I made about 0.0015BTC (15$). So by using the leverage I made 150% profits on my own balance. I call that a whopping result 😂

[concertrate]

Leverage amplifies your result without a doubt, but had your speculation been wrong and no stop loss in place or without enough margin to ride out volatility you can see your ass handed to you gambling alone is inherently risky, so gambling on leveraged positions is not for the faint hearted. 

 

At the end of the day we all have different risk profiles and risk appetites, much in the same way some go for high bet low multi and others do low bet high multi. 

 

Different strokes for different folks 

[nattekut]

1 hour ago, concertrate said:

Leverage amplifies your result without a doubt, but had your speculation been wrong and no stop loss in place or without enough margin to ride out volatility you can see your ass handed to you gambling alone is inherently risky, so gambling on leveraged positions is not for the faint hearted. 

 

At the end of the day we all have different risk profiles and risk appetites, much in the same way some go for high bet low multi and others do low bet high multi. 

 

Different strokes for different folks 

entirely through. thats why I also showed in the topic post that taking a leverage higher than 10x is very risky. With the volatility of the crypto market it is almost like committing suicide to go for 25 - 50 or 100x leverage. I must admit I sometimes take a 25x or 50x with a smaller amount like for example 25$ but then I make sure I have around 100€ extra to increase my margin. I even tried this with 100x. this is a nice way to try out 100x leverage but still with a decent margin. But it still is risky. I only apply 100x when the market is waving slowly up and down but never when there has been a short run or a sudden dump.

And when I go 100x leverage in a position then I always make sure I have at least 4 times the money I put in the position to expand the margin. so if I take a 100x on 25$ then I make sure I have 100$ extra to add to the margin so I get more playroom

[concertrate]

@nattekut thanks for the engaging responses and insights you share. It's nice that there are others in the community with interests in financial markets and understanding of the mechanics. I'm hoping that my behavioral bias series will create some nice discussion and education as well.!

 

 

[nattekut]

 

Made another 2 profitable trades. Made about 20$ profits with only putting 100$ at stake by using a 25x leverage on 100$ positions to activate 2,500$ positions. BTC only moved a little but I still made 20$ profits on only a 100$ minor risk which I consider a 25x leverage is. Its not the safest way but like I mentioned before I still hold enough to expand the margin while screening the market

[harihrn]

Leverage trading is always risky, i went from 0.1 BTC to 0.4 BTC and then to 0 BTC

But there is a concept of Rebate of 0.025% when you do a limit order (Bitmex), So ideally when you enter and exit in the same price with limit order, you earn some profit. this is more for Altcoins. I used to open and close 50 to 100 trades at same price / little profit - this makes a really good profit. But this is very time consuming process.

[BombMagneto]

Probably but all things are risky from the start. But if were talking about commodities its different because commodities tend to go long in the long run.

[LyricalLandon]

Probably but all things are risky from the start. But if were talking about commodities its different because commodities tend to go long in the long run.

[Turnip]

There is money to be made in leverage trading, if you plan on holding position long enough (and not trading on few minutes positions where volatility can make things essentially random), you can make decent profit, provided you know a bit what you're investing in, and why.

Random calls on high leverage will bust you 100% !

[vaki]

my leverage 10x

[e_abrams]

High leverage is a trap and leads to severe losses for traders, more often than not. The problem is so big that serious financial regulators like the FCA and ASIC have altogether banned leverage above 1:50: https://www.forexbrokerz.com/news/new-forex-rules-come-into-force-in-australia

I do not recommend using anything more than that.

[PhirePlame]

It is gambling.

[Theignorantway]

The most obvious and unconditional advantage of margin trading, or, as it is also called, "leveraged" trading, is that the use of margin, which is borrowed funds from a broker, allows the investor to artificially "build up" his position. If you do not have enough own funds to carry out transactions for the purchase / sale of securities, the broker can provide you with the necessary amount. Well, the cons, as you can already understand, are significant risks, because you will have to repay the amount that the broker gave you for loans. There is a very good article here on when it is beneficial to use this style of trading - https://daytradereview.com/.

[MaeKrugern]

Is it possible to earn money on trading now? Or is everything completely unstable?

[Cienapotr]

It is possible to make money on trading even for a beginner without starting capital. If you have just decided to engage in stock trading, then you are lucky — all the discoveries and secrets are waiting for you ahead. Yes, the stock or financial market is not a source of easy money, but the first independent transactions can inspire even with an investment of $ 100-200. A successful receipt of a stable plus based on the correct handling of financial instruments, understanding such things as the difference between cent and standard account https://fbs.com/blog/best-trading-accounts-261, a well-thought-out strategy, and applying the basics of analysis - allows you to apply knowledge in practice and improve the mechanism for concluding transactions for promising profits.