What is leverage in cryptocurrency trading?
Leverage in crypto trading allows you to borrow funds to amplify your trading power.
With leverage, you can control a larger position than your actual capital, thereby increasing potential profits and losses.
Different exchanges offer varying leverage ratios, some even allowing up to 200 times your account balance.
For example, if your account has $100 and you use 200× leverage, you can open a $20,000 position.
Leverage is typically shown as a multiple, for example:
5× (5 times your capital)
10× (10 times your capital)
200× (200 times your capital)
This indicates how much your capital is multiplied. For example, with $100 and 10× leverage, you could take a $1,000 position in Bitcoin (BTC). This way, your $100 controls a $1,000 position.
Important note: While leverage amplifies your gains, it also magnifies your losses. If the market moves against you, your position may be liquidated quickly. Therefore, always prioritize risk management when trading with leverage.
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The WEEX Team
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