Topic: Leverage Trading (Read 844 times)

I do not think exchanges (trustworthy exchanges) are manipulating the market, the future derivatives market can be very volaltile at times which can be very significant than the spot market but this is not common but it can happen at anytime especially if massive bull run is very near or during the time in a way some people (traders on a particular exchange) will want to manipulate the price to favor them, this is never an exchange ways of making money, the profit earned by exchanges are the margin fee which is usually higher than that of spot trading.

Margin trading is complex and at the same time, it's simple. If you don't understand, you would lose all your funds. Leverage is the gift of futures trading, and it's the only difference between spot and futures trading. Mind you, the higher your leverage, the higher your risks of liquidation and the lower your leverage the lower your risks of liquidation. Newbies are advised to start with a demo account and spot trading before going into margins and futures trading. Leverage depends on the trading Exchange you used. For me, I used Binance to trade futures and set my margins to Isolated which means my trade are isolated from themselves, which means liquidation in one trade, it will not take up the funds in others. It's mostly recommendable for beginners

You are right, when a person is starting in the world of trading, it is necessary for him to know that there is margin trading, but that is not recommended from the start, because it is very easy for his position to be liquidated and he will be left without funds, and that It is not what you are looking for, in part a beginner trader before doing real trading it is necessary to trade with fictitious money, only with fictitious money you test your strategy and also learn to know the tools of the exchange, for that it is an advantage .

Of course, aside on taking up some profits from those trading fees and other sources then they are really making out something in behind the curtains but its sure that it wont really be that noticeable
because if it does then its game over for their business once they had been caught on being that manipulative which it isnt really that easy for them to do so because it does have particular risks
but if not caught then they would really be enjoying for more revenue.We are seeing that these platforms are indeed making that much.

But I think centralized exchanges earns more money compare to the decentralized exchanges because more people uses them daily although with the huge traffic that they get, this can also cause their site to malfunction sometimes so they still use some of their money for the site's maintenance. Other than exchanges we also have wallets, cryptocurrency itself, and so on. The one that develops or maintains them do earn too.

@OP
Yes, there is a major difference because one is 5 usd and the other is 100 usd, the leverage multiplier that each of them use are also not the same. One is 1x and the other is 50x. Is there anything you want to know? or you are confuse if what to choose? I believe that the higher the leverage multiplier the higher the risk, also risk depends on the funds that you're going to use.

Not only individual traders earn money on the cryptocurrency market, but also exchanges, regardless of whether they are centralized or decentralized. I personally think that exchanges earn much more by manipulations that lead to the elimination of margin positions.

It is risky for the newbies and it is risky for every veteran as well because the leverage makes sure that you lose ALL your entry when you are wrong and it is like gambling. However at the same time we are talking about something that is done by so many people and that is what I want to get attention towards. I mean there are so many people who do it, and the other half is making money from it.

As much as money lost, there are money earned as well. Maybe there are 1 million people who wagered 1 dollars each versus one guy with one million dollars and just one person won and 1 million people lost. It is not as clear as that usually, but the winner people could be less than losers, but they are still there.

The truth is that leverage is a very sensitive issue, because each person has a version of their own risk, some are more daring to risk their money much more than others, in my case margin trading is different because the most I have leveraged in an operation it is x10 and with all the adrenaline to the maximum possible, some leverage x50 and the truth is I don't know how they have the heart to do it, because the risk for their positions to be liquidated is much more open than any other, in binance they have that option and I know that many people use it, I really admire them for having nerves of steel.

Margin trading is dangerous for beginners and for those who do not comply with risk management. The leverage provided by the exchange will help you to operate with a larger amount in the transaction, and will also allow you to open a short position, which is impossible to do with spot trading.

Everyone has talked about how dangerous leverage trading is, but then who are these people who ended up with trading on leverage so much? We are talking about billions of dollars traded on leverage in crypto world every single day. If we are all saying that it is dangerous (and I do not do leverage trading as well) then who are these people who do it?

I believe that it is dangerous for people like me, and that is why I stay away from it. But, there must be some people who know what they are doing and they must be doing it to make some money. This is why it is not dangerous for "everyone", it is just like that for newbies or people who are not interested in it.

There is a lot different within 1x leverage and 50 leverage irrespective of the trading amount , one thing you have to note is that using 50x leverage is on the high one so manage your risk, the market makers will see such exposure as an opportunity and you will immediately get liquidated from the market, this is not advisable except you want to do some experiment with your capital.

There are numerous difference when it comes to leverage and margin trading. Leverage are only used when trading futures, and the higher your Leverage, the higher your profits and also the higher your risk when the market go against you. When trading with leverage, it is advisable to set your Limit order and Stoploss order, these order prevent your account from running into liquidation and helps give you your profits when the coin hit your limit order target.

The difference is that you can trade $5000 with less cash, therefore risking less of your own money. However, your margin capital will take lose 50x faster when the market goes against you.
Also, if you trade a $100 account with 50x leverage, your trading fee will quickly eat up your account. Let's say that you have a trading fee of 0.10%. A position size of $5000 would mean a fee of $5000 x 0.001% = $5. This means that you can only afford 20 trades (without calculating profits/losses).
Now, if you are a decent trader and know how to trade the market, leverage can be used in a good way at lower ratios to boost your winners. Since you can control your losers with a stop loss, any patient trader can make money with leverage if they have a proper strategy. Also as someone previously mentioned, if you trade with a 50x leverage you are going to have a 0.02% liquidation level, meaning, the market can only go against you 0.02% before you are wiped out. If you trade a non-leveraged position of $5000 you don't run the risks of getting liquidated at all. Also, when you trade with leverage you are trading some kind of derivatives contract that derives its value from an underlying asset. For example, if you trade stocks with leverage you are not going to have ownership of that stock and the contract you are trading is just a mirrored contract of the stock price.
The last thing that is different is the overnight roll-over fee. When trading with leverage you are essentially borrowing money from the broker or the exchange and they will almost always ask you to pay this money back plus interest. So, when you hold positions overnight you are charged with a roll-over fee that can be anywhere between 0.02% - 1% depending on the broker. Try https://leverage.trading/ for more information on this topic, the website is pretty small but it has good information.
So, to sum up:
* The difference in position size is = Same
* The difference in risk = Proportionally more risk for a smaller account
* Trading fees = Same fee which will eat up a smaller account faster
* Roll-over fee = Most leveraged accounts are charged an over-night fee
* Underlying asset = Not owned when trading with leverage

There is much difference here which is the risk management that is applied here. A trader that decided to trade with $5000 can stay quite longer in the market, if price or trend goes against them, which can absorb much volatility compared to a trader with just $100.
A trader that tend to trade the market, maybe let's assume Bitcoin against usdt which has high liquidity and the trade might to cut off if the trend eventually goes against the trader. The risk management here is high and no trader or mentor will advise anyone to indulge in this kind of trading style. I think this is pure gambling not trading cause it's too  risky.

Leverage trading is very dangerous. I have lost my whole account balance in leverage trading. If you are trading with high leverage and market goes wrong from your position. You will get a huge loss. and something our whole balance vanishes.
I prefer you to don't trade in leverage trading. It is very risky. So, stay away from leverage trading.
If you want to do leverage trading then please start with low leverage such as 1-5X leverage. It will be your maximum leverage. Then you get success in leverage trading otherwise you get losses.
Spot trading is best then leverage trading. It is safe.

For leverage trading then this is something which isnt noob friendly thats why on the time that you consider out on touching leverage then you should have at least the idea on what you are dealing with.

Because if not then you would just be basically be wasting off your capital since it would be burnt out easily or wipe in fast pace manner if you do make a mistake.
This is why i dont  tend to touch up something goes beyond 50x to 100x or more.. My maximum risk tolerance could only be on 10x maximum.

What leverage do you use in your trading and how often do you open new orders? As I understand it, using high leverage to open an order for such an amount is very risky. In addition, in such transactions, a stop loss must be set to limit losses.

I think the same, some traders make their trades thinking that their big capital is going to protect them from the movements of the market when it should be the other way around, the bigger the capital the more the trader needs to protect it.

In my opinion only expert traders should use leverage at all, the rest must content themselves by just trading with the capital they have, I understand this is not something people want to hear, but taking into account that the majority of traders lose money in the markets, adding even more risk to your trades by using leverage reduces the chances of actually making profits in a significant manner.

The question of OP look like there is no difference between the two. If the person will lose the money, in both cases the person will losse all the monies.
Another thing to consider is the volume the capital will create in the market.
I am not a fan of leverage trading

@Wind_Fury Trading cryptocurrencies that too using leverage is very risky. A trader needs to have specific trading skills and should have proper knowledge and understanding about trading cryptos.