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Leverage
The leverage effect allows traders to increase their buying power.
Let's assume you want to buy 1 BTC because you think the price will increase. Now, assuming Bitcoin is at a value of $50,000, you can generate up to $50,000 in buying power with $5,000 and 10x leverage by hedging a position with margin - a collateral that is worth less than the total position size.
Example:
You can open a BTC long position worth 1000 USD with a margin of 100 USDT. Your leverage is 10x, which corresponds to a margin ratio of 10%. When the margin ratio drops to 2.5%, your position will be fully liquidated. Example
Using leverage exposes your money to liquidation at any time. Make sure you understand the risks of leveraged trading before proceeding.
Last modified 8mo ago