Risky but paying off!!!!!

[nattekut]

I think several of you already heard about trading with leverage/margin. To put it easy by putting your own balance at risk you can borrow from 2 up to 100 times your own stake to put in a trade.

Firstly I want to say that I am not a huge fan of the leverage 25x 50x or 100x. They are bloody risky and will eat your balance if you go in on the wrong moment. Thats why I opt for a leverage of maximum 10x when I do leverage trading. 

For those who do not know leveraged trading I will explain with a pretty simple example.

Lets assume we have 100$ and BTC at this moment is exactly 10,000$. For easy calculations fees are not taken into account.

Regular trading

I purchase a position in BTC for 100$ at the time BTC is 10,000$ Lets say there is a sudden pump and BTC increases to 10,500$. This means that BTC is making a 5% change. This also means that your position increases with 5%. We decide to get out of the trade and we manage to bank 105$. So we make a 5% profit on our entire balance. Not that bad... but still lots of people aren't happy with this result. For those people there is leveraged trading

Leveraged trading

In this example we have the same 100$ and BTC also is at 10,000$. I am not willing to only out 100$ in a trade and I decide that I want to do a 10x leverage trade. Instead of only 100$ we now have a position of 1000$ cause actually you borrow 10x of your own balance to put in to the trade. Lets say BTC makes the same movement and increases to 10,500$ or with other words a 5% increase. This also means that your position increased with 5% or in other words 1,050$. So this means that you exit the trade at this point you will have profited 50$. So now your balance will be 150$ or in other words a 50% profit on your personal balance.

 

Conclusion

So BTC made the same movement in both examples. But my profit with a leveraged trade is 45$ more than when I would have executed a regular trade position. This just look unreal but I can vouch this is just insane and it can increase your balance much faster..... BUT of course there is a catch. 

 

Whats the catch?

In practice you actually are borrowing extra money to make trades. So there also is a back side of leverage trading. In every leveraged trade you put your own money at risk. And the higher leverage you take the riskier it becomes to loose your entire personal balance. I will explain some more below with some pictures.

In leverage trading you trade and predict wether the price is going up or down. If you take a LONG position you predict the price is going up and goes higher than your purchase price. If you take a SHORT position you actually predict the price is going to end lower than your purchase price. If for some reason the price goes the other way around you take the risk to loose your own money.

 

2x leverage PRETTY SAFE

 

The picture above shows us a 2x leverage trade. So buy paying 0.01BTC we receive a 200$ position. So when BTC goes up you will make profits on 200$ instead of 100$. This is a pretty safe leverage trade. Cause you see the liquidation price is set at 6689.5$. This means that if the price falls back to 6689.5$ you will loose your entire 100$ own balance to cover the losses of your trade. But this will hardly happen. You can set a stop loss and take a small loss or just wait out .

Possible earning. For every 1% BTC increases you make 2$ profits. So if Btc goes up to 10,500 you will end up with a balance of 110$ or 10% profits on your 100$ balance

10x leverage. MORE RISKY BUT DOABLE

In the picture above you see a 10x leverage trade. You see with a 10x leverage you are capable to take a 1000USD position by also just putting your 0.01BTC at stake. But as I said the higher the leverage the higher the risk. In the 2x we had a liquidation spot around 6,689$ But with a 10x that liquidation is set a 9,133.5$. This means if BTC drops to that point you will loose all your money and your spot gets liquidated. its advisable to set a stop loss so that you can loose max 10-20% of your balance.

Possible earnings. You make 10$ for every 1% BTC goes up. If BTC goes to 10,500 then you make 5% on your position or 50$. This means that you end up with a balance of 150$ which means you make 50% profit on your 100$.

100X leverage KAMIKAZE TRADING OR JUST GAMBLING

Manny people get tempted and take the risk. But I consider a 100x leverage trade as fucking insane. You can loose your money in less than 5 seconds. You notice with only a single 100$ you can open a position of 10,000$ This means in current situation by only taking a 100x leverage with 0.01BTC you actually open a position for 1 full BTC . This looks amazing but there is a huge catch. Your liquidation price is set at 9,951.5$. This means if BTC only drops less than 0.5% you will loose your 100$ and your position gets liquidated. So in my opinion this is more gambling instead of trading.

Possible earnings. Lets say BTC makes the same move from 10,000 to 10,500$ then you will make 5% profits on your 10,000$ position. this means you profit 500$ So your balance will have grown from 100$ to 600$ which means an increase of 500% on a single trade. But as you see only a tiny drop of bTC will screw you and end up loosing your initial 100$

 

What I am waiting to show is that leverage trading can be very interesting but just like in gambling you only use money that you are willing or are capable of to loose. But I think if you just play with a 10x leverage or below you can make a decent amount of money without taking huge risks. I consider 10x leverage or lower as regular trading. In regular trading you sometimes also need to take losses. You can't be profitable every single time.

[cryptofly]

Thank you very much, is a very complete information and easy to understand.   I would just like to add about the importance of learning to identify the trend through analysis of the trading graphs which I think is a very important learning process in order to have success in your leverage trading.  

It is very important to participate in the forum by adding topics with important and useful information......like this one.  Thank You and Good luck. 

[nattekut]

2 minutes ago, cryptofly said:

Thank you very much, is a very complete information and easy to understand.   I would just like to add about the importance of learning to identify the trend through analysis of the trading graphs which I think is a very important learning process in order to have success in your leverage trading.  

It is very important to participate in the forum by adding topics with important and useful information......like this one.  Thank You and Good luck. 

thx. yeah a good analysis of the market is necessary if you aim for big profits but also can be used for an easy Bollinger Band based trading strategy. Certainly when only using a max of 10x leverage. BTC is jumping 50 to 100$ multiple times a day. With a small balance you would only take tiny profits but if you can increase your position with a 10x leverage you will be able to make 10 times more with a minimum of risk 

[Kate]

Umm can i ask ya one thing ? Which site or exchange do you trade on ? Because i also do trade but not while taking huge risks but i do take huge risks sometimes . It is a good analytics you did but its purely based on prediction the way i see it. 

[williamshennie9]

Leverage can be extremely risky. It can make new traders lose their money very quickly. At the same time, people who know what they are doing, tend to use leverage to their advantage to make even more money.

[nattekut]

21 hours ago, williamshennie9 said:

Leverage can be extremely risky. It can make new traders lose their money very quickly. At the same time, people who know what they are doing, tend to use leverage to their advantage to make even more money.

exactly lot of newbies think to make easy money but they will get their ass burned. I am trading crypto and forex professionally for over 4 years now and I only got into crypto leverage trading for about 10 days now. And I am only testing with a small amount of money now. I have been doing leverage on gold and other markets for years but in crypto you need to adjust your strategy entirely. its much more swingy.

But so far so good. I only started a testing account with 20€ worth of bitcoin and in 1 week the account grew to over 200€. So I think I am starting to get it all figured out. So in about a week or so I am going to drop 1 or 2 full BTC into it.

[cryptofly]

On 7/20/2019 at 1:29 AM, Kate said:

Umm can i ask ya one thing ? Which site or exchange do you trade on ? Because i also do trade but not while taking huge risks but i do take huge risks sometimes . It is a good analytics you did but its purely based on prediction the way i see it. 

Bitmex is the site where I do leverage trading once in a while. It can be a disaster for your wallet if you don`t go with eyes wide open and radar to max potential. Leverage is a giver, but a killer to.  Good luck with that.

[nattekut]

4 minutes ago, cryptofly said:

Bitmex is the site where I do leverage trading once in a while. It can be a disaster for your wallet if you don`t go with eyes wide open and radar to max potential. Leverage is a giver, but a killer to.  Good luck with that.

yeps I'm using bitmex as well. I am going to do more leverage trading but without taking to much risk. I am going to add more of my own balance but only take up to 10x maybe sometimes 25x if I am almost sure how the market is going to move. And its perfect to take big swings. For example I am intending to put up a long around 9000 with 1 full btc at 10x leverage. So I will have a 10BTC position and then ride the wave when it heads back to 14k. If I manage that I take a whopping 40k profits. And by taking 10x I will have a decent margin so I will be able to take a small hit if it temporarily drops below 9k