Hello people
So I'm a bit new to leverage trading especially.
I'm trading on Kraken and I have this situation:
I opened a long at 2.091$ for 0.4BTC so around 800$ at a 5:1 leverage
So right now price is 3.5% higher.
If I close my position I'll earn about 30$ and that's what I don't understand!
30$ is what I would have earned with buying 0.4BTC at 2.091 and selling it at the current price. Where is the leverage effect here? As I was doing a 5:1 leverage trading my actual profit should be 150$ no?
So I'm a bit new to leverage trading especially.
I'm trading on Kraken and I have this situation:
I opened a long at 2.091$ for 0.4BTC so around 800$ at a 5:1 leverage
So right now price is 3.5% higher.
If I close my position I'll earn about 30$ and that's what I don't understand!
30$ is what I would have earned with buying 0.4BTC at 2.091 and selling it at the current price. Where is the leverage effect here? As I was doing a 5:1 leverage trading my actual profit should be 150$ no?
5:1 leverage means that if you have say $1000 sitting on an exchange that allows 5:1 leverage you can open a margin long for up to $6000 worth of Bitcoin (your $1000 + $5000 borrowed for leverage). You can also open a long for $800, but then you are not actually using leverage because you have more than that sitting on the exchange already to cover that ($1000).
