Topic: Trader of Bitcoin: How important is the "leverage" feature for your trading ? (Read 1377 times)
March 15, 2015, 08:57:55 AM
No matter what market you are trading using leverage, the experienced traders have their strategy to earn a lot, but for newbie, they will lose quickly! They don't have any strategy, just trade arbitrarily, don't know anything about risk management!
March 15, 2015, 08:49:20 AM
what is leverage in this context? 
Lets say you have 300 usd and you are 99% sure the price of btc in usd/btc will go from 300 usd/btc to 330 usd/btc in the next week and that it will not at any point before that drop down to more than 290 usd/btc then you can for example:1) buy 1 btc and hold if and when the price gets to 330 usd/btc you can sell it for 330 usd and get a profit of 30 usd or
2) take a 5 times leveraged long position usd/btc with 200 usd and sell the position when it reaches 330 usd/btc and get a profit of 200*(((330/300)-1)*5) = 100 usd profit
Basically you lend 4 times your own (200 usd) amount in the second example and invest 1000 usd in total and then profit or losses becomes 5 times higher in this example the reason why you only take a 200 usd position in this example is to handle possible smaller downswings before the value of bitcoins gets to the 330 usd/btc level one predicted, the 100 usd left can in this example handle a 100/200/5 = 10% downswings.
There is some fees to for lending funds also so this is just a basic example but if your correct in your assumptions you can earn more with smaller amounts avaliable if you do leveraged tradings, but the risks also increase.
sounds mega risky.. i doesnt sound like i should do it!
but thanks anyway!
All in all its generally more risk trading with leverage greater than 1 compared to just straight trading back and forth on a currency couple on an exchange but the risklevel can be set depending on what markets/indicators and how much leverage one uses.
March 15, 2015, 01:33:55 AM
what is leverage in this context?
Lets say you have 300 usd and you are 99% sure the price of btc in usd/btc will go from 300 usd/btc to 330 usd/btc in the next week and that it will not at any point before that drop down to more than 290 usd/btc then you can for example:1) buy 1 btc and hold if and when the price gets to 330 usd/btc you can sell it for 330 usd and get a profit of 30 usd or
2) take a 5 times leveraged long position usd/btc with 200 usd and sell the position when it reaches 330 usd/btc and get a profit of 200*(((330/300)-1)*5) = 100 usd profit
Basically you lend 4 times your own (200 usd) amount in the second example and invest 1000 usd in total and then profit or losses becomes 5 times higher in this example the reason why you only take a 200 usd position in this example is to handle possible smaller downswings before the value of bitcoins gets to the 330 usd/btc level one predicted, the 100 usd left can in this example handle a 100/200/5 = 10% downswings.
There is some fees to for lending funds also so this is just a basic example but if your correct in your assumptions you can earn more with smaller amounts available if you do leveraged tradings, but the risks also increase.
The trades you mention ARE indeed risky, but not all Bitcoin trades are created equal, and more importantly, not all carry such a high level of risk .
A person can use Bitcoin to invest in DOW, NASDAQ, Gold , Silver [and others] which are much less volatile that the BTC/to-other-digital-currencies trade that you described.
March 15, 2015, 12:22:04 AM
what is leverage in this context?
Lets say you have 300 usd and you are 99% sure the price of btc in usd/btc will go from 300 usd/btc to 330 usd/btc in the next week and that it will not at any point before that drop down to more than 290 usd/btc then you can for example:1) buy 1 btc and hold if and when the price gets to 330 usd/btc you can sell it for 330 usd and get a profit of 30 usd or
2) take a 5 times leveraged long position usd/btc with 200 usd and sell the position when it reaches 330 usd/btc and get a profit of 200*(((330/300)-1)*5) = 100 usd profit
Basically you lend 4 times your own (200 usd) amount in the second example and invest 1000 usd in total and then profit or losses becomes 5 times higher in this example the reason why you only take a 200 usd position in this example is to handle possible smaller downswings before the value of bitcoins gets to the 330 usd/btc level one predicted, the 100 usd left can in this example handle a 100/200/5 = 10% downswings.
There is some fees to for lending funds also so this is just a basic example but if your correct in your assumptions you can earn more with smaller amounts avaliable if you do leveraged tradings, but the risks also increase.
sounds mega risky.. i doesnt sound like i should do it!
but thanks anyway!
March 14, 2015, 07:29:05 PM
what is leverage in this context?
Lets say you have 300 usd and you are 99% sure the price of btc in usd/btc will go from 300 usd/btc to 330 usd/btc in the next week and that it will not at any point before that drop down to more than 290 usd/btc then you can for example:1) buy 1 btc and hold if and when the price gets to 330 usd/btc you can sell it for 330 usd and get a profit of 30 usd or
2) take a 5 times leveraged long position usd/btc with 200 usd and sell the position when it reaches 330 usd/btc and get a profit of 200*(((330/300)-1)*5) = 100 usd profit
Basically you lend 4 times your own (200 usd) amount in the second example and invest 1000 usd in total and then profit or losses becomes 5 times higher in this example the reason why you only take a 200 usd position in this example is to handle possible smaller downswings before the value of bitcoins gets to the 330 usd/btc level one predicted, the 100 usd left can in this example handle a 100/200/5 = 10% downswings.
There is some fees to for lending funds also so this is just a basic example but if your correct in your assumptions you can earn more with smaller amounts avaliable if you do leveraged tradings, but the risks also increase.
March 14, 2015, 05:59:32 PM
as experience trader (person who invests bitcoin in various exchanges)
Is leverage important to you or is this something that you dislike/avoid ?
Is leverage important to you or is this something that you dislike/avoid ?
Leverage increases the risk way too much. BTC and alts are bouncing up and down enough, so leverage is a bad idea.
March 14, 2015, 04:30:40 PM
what is leverage in this context?
March 14, 2015, 03:04:02 PM
I wouldn't advise you to use leverage if you are trading beginner, it's dangerous and you could lose all you money, especially when you are using higher leverage(less guaranty bond),People are addicted to leverage because you can throw out a minnow to catch a whale with the leverage,so I call it "gambling" instead of leverage.
You can lose through leverage and you can lose without leverage.
the leverage itself has nothing to do with it
You CAN lose all your money. but this would happen only if you risk all your money.
BUT, if you limit possible loss (and you can limit), I'm sure you would agree that one can prevent such a thing from happening
This, of course is not a recommendation to use leverage, but a distinction that one should know what he/she is doing, before doing it.
this apply for many areas of life.
Question - Did you ever use leverage , or are you against the idea of leverage on principle ?
March 12, 2015, 02:25:39 AM
I wouldn't advise you to use leverage if you are trading beginner, it's dangerous and you could lose all you money, especially when you are using higher leverage(less guaranty bond),People are addicted to leverage because you can throw out a minnow to catch a whale with the leverage,so I call it "gambling" instead of leverage.
March 12, 2015, 12:49:17 AM
for extra fun, necessary but not important
Have you ever Leveraged ?
March 11, 2015, 09:48:11 PM
for extra fun, necessary but not important
March 11, 2015, 03:40:29 PM
thanks for the insight.
for some reason i can't see the importance level you gave. Is it safe to assume it is the highest priority ?
for some reason i can't see the importance level you gave. Is it safe to assume it is the highest priority ?
March 11, 2015, 02:52:13 PM
Aside from altcoins I only trade with leverage. It allows me to keep most of my stash in cold storage while trading with my whole portfolio value or more.
March 11, 2015, 09:37:13 AM
as experience trader (person who invests bitcoin in various exchanges)
Is leverage important to you or is this something that you dislike/avoid ?
Is leverage important to you or is this something that you dislike/avoid ?
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