Topic: Trading Leverage - page 2. (Read 1035 times)

I've always said that it is not about the leverage but the risk taken through it, and even if you are planning to trade with some risks, you should be planning to trade with some management that will be able to counter the excessive negative effect of the risks. This is why I appreciate what you wrote here. As an experienced trader myself, I know the value of minimizing our risks, and if someone can down it low to the level of 1-2% then it is a very good bargain that will most likely not affect the trader. Because such will not lose his money so easily, and when the trading strategy of the trader is good, it will be another opportunity to overpower the market squarely to the advantage of the trader.

Also, the use of support and resistance to place the trade is so important in minimising the risk exposure. You can't compare the person who bought an asset at about 100 pips above its support level with the person who bought it barely 5 pips above it, the latter is the better trader who is being cautious with the risk management and the account safety. Nonetheless, one should also ensure that the support and resistance strategies they use are strong enough for this task, this is where many traders miss it and not the managerial plan itself. I use trendline, price action and the peak and bottom of candlesticks to actualise it.

Why do you don't think oppositely?

The importance of a trader is capital, trading capital. If a trader loses his trading capital, his trading career is over.

10% loss is 10% loss, no matter how big or small your trading capital is. $7 can be very small with many people but with some people and traders, it's big and worth to protect it.

1% or 2% loss is small, repeat it 20 times, and you will lose 20% or 40% of your initial trading capital, not small at all.

When running up a business, then of course you would really be offering something that brings out advantage for you as a business owner. 

When people talk about a stop loss being 1% to 2 %, they refer to the amount of money they can lose on each trade before they are just gambling their money away, and not necessarily the level at which the stop loss level should be, so as an example, supposing the price of bitcoin was at 70k, you wanted your stop loss to be at 60k and you had a capital of 100 dollars, how big your position size should be in order to only lose 1% of your capital if the stop loss was activated? And the answer is 6.9979 dollars.

Yes, indeed, I have given these figures as an example. Nevertheless, these figures are quite real if you open a long position from support and, accordingly, short from resistance. In this case, you will have a very small loss if the price moves in the opposite direction to your expectations.

So there is no difference after all
I would also like to have significantly more movement with small stakes in crypto. You don't necessarily have to use leverage in Forex either. For example, if you enter a trade with 1 billion dollars, it doesn't matter if the market only moves 0.001%, the movement is still enormous in terms of FIAT movements.

Don't get me wrong, I have absolutely nothing against an exchange offering leverage if clients want it. But as a crypto trader in particular, you have to be aware of what you are doing here and how quickly leverage can lead to your account being completely wiped out. Unfortunately, I'm not sure whether exchanges are doing enough due diligence and should, for example, block leverage for newly registered customers anyway.

the difference of leveraging with forex and crypto in forex it incentivizes faster market movement by using high leverage with the smallest change of a price we can get big profit at the risk of the captal itself.
meanwhile with crypto its just purely leveraging for the purpose of getting bigger profit I mean in forex the purpose is also kinda the same to get bigger profit but without it the forex market would be boring.

despite the controversy though I really like this feature, with small money you can turn it into bigger ones and if you lost well you lost anyone using leverage should know they are risking their capital more than anyone else the higher the leverage they choose, though in crypto trading, most of the trading platform only offers 25X leverage probably above that it will not make sense since the price movement and overall volatility of the entire crypto market is really volatile that a little shake your 100x leverage gonna gone in an instant.

still for newbies they need to watch out, leverage isn't for amateur, even pros are carefully leveraging their capital.

I know you gave an example only but in this volatile market, stop loss with 1 - 2 % will be terrible. I know stop loss, stop limit orders are very helpful to minimize loss and avoid serious loss in a market crash but 1 - 2 % should not be used as a limit to exit the market with either Stop loss or Stop limit order.

One of best weapons in trading
Bitcoin supports and resistances for dummies

It's reasonable because leverage is a a double edge sword. You can buy double or 10x amount of coin with the amount you invested but you have a margin limit to carry on. Once you exceed that margin threshold, all your money at risk will be gone faster. That if you overleverage, your stop loss will be too tight and not enabling your trade to breath for some market correction. Leverage is only helpful when you use it the right way.

I think that in this case it is necessary to use a stop loss. In this case, you can reduce your losses if the price moves in the opposite direction to your expectations, for example 1-2%. Thus, your loss will not be 500 dollars, but 50-100, depending on the level at which you set the stop loss.

Trading with leverage naturally always involves risks that you should always be aware of it can of course happen that the price does not move in the desired direction and just as profits are multiplied losses are also multiplied. For example we take $1,000 and bet on the rising price of bitcoin with a 5x leverage if the price goes up by 10% we make a profit of $500 which is a gain of 50%. However, if the price falls by 10% we make a loss of $500 and lose half of our initial amount. If we take this to an extreme and say we use a 100x leverage we would double our money if the price only goes up by 1% but if the price goes down by 1% we would lose all of our invested capital.

Before worrying about leverage, we must first understand trading well. If we can gain knowledge about trading, then if we trade, we will definitely get success through trading. There are many newbies who bother with Liberace without having a good knowledge about trading, I would say for them, of course, in the case of trading, first of all you need to have enough knowledge about trading. In the case of trading, we must have a long-term plan, we must check the market, and if we trade patiently, we will definitely become successful traders in the future.

I see on X  (CT) everyday that newbies are advised to stay aware from leverages due to how inherently risky it is to open and hold a leveraged position especially in times when market is volatile in the other direction of one's trade. Despite all the negative opinions and feedback by KOLs and influencers, I do think that leverages are net positive for the space when it is done with (aka with proper risk management  as @tvplus006 has already said).

If done right, leverage can give you the much needed liquidity to make good amount of profit enough to set you up for life because in trading, liquidity is king.

I understand that margin trading is not acceptable for all participants, but I am sure that everyone who lost money using leverage, they all violated risk management. And the fact that you cannot adhere to the risk management strategy is not a reason to refuse to open short positions when the market is in a bearish stage.

well thats kinda the essence of leverage honestly usually I think the exchange will always give warning of the side effect of using the leverage feature it is definitely described as a double edged sword where it grant opportunity to people at the cost of their capital.
most of the future trader using leverage out there I think are people that are experienced already, if they are just some random newbies that are leveraging their asset it might means they are greedy and will probably just lost the money along the way.
if you are experienced in a nutshell feel free to use the leverage feature, but if you think your newbie, you know whats best for you maybe the spot trading is already good enough a place to start.
i think its as simple as that.
its just the right feature provided by exchange to give people the chance to do much more than their capital actually allowed to do and I think there's no problem if an exchange having it as a feature.

With Margin and Futures trading, people can open short position that they can not do with Spot trading. However, with Margin and Futures trading, they will have to face with more manipulation from market whales and exchanges.

Centralized exchanges have data on opened positions of their users and they can use available data to manipulate market price to kill long and short positions. At the end, centralized exchanges are winners. People will long or short positions will be liquidated but they can not complain and can not get money back as it is part of the game with Margin and Futures trading.

You shouldn't be so categorical) After all, everyone knows that one of the advantages of futures trading is opening short positions, which is impossible to do in the spot market. And since we are dealing with a highly volatile market, then you can choose for yourself the minimum leverage of x1 to open a short position.

I actually never thought that trading with leverage was good for us, except for professional traders who are already experts and are used to leverage. Trading with leverage is something that carries high risk. Yes, indeed, it can really make us get extraordinary profits. But on the contrary, it can also make us lose our money quickly. especially if we play with high leverage, and without sufficient knowledge. So, if you are not ready, then it is better not to leverage, or just use small leverage with good funds management.

That is how they attract new traders. This is business and leveraging ideas makes them more money. If you are a trader with only have small capital, you could really think this is the solution. Well, this also helps them to start but the exchange of such offer is quite not good especially if you lose them all. That is why if you are a beginner, this is highly discouraged in order not to face the huge consequences. It is better to just borrow money from your friends or from the locals rather than use this leverage feature of the exchange. Or the best thing is not to do any of these ways in order not to compromise our finances.

Leveraging in trading should be one of the most important aspects in trading and we need to earn so that we don't end up doing the wrong thing because we don't have the knowledge or skill to go about it. It is very important for us to try as much to get the skill in trading with ease not trying too hard to make things happen. Leveraging has been the problem if many traders because they don't want to calm down and learn how to trade successful or trade with being greedy. Greed has been the problem of many gamblers and we need to make sure everything gets resolved as soon as possible.