Anyone who trades Bitcoin and other cryptocurrencies with leverage increases their potential profits significantly. But at the same time the risk also increases. Whether it’s worth it also depends on how much experience you have.
Trading with leverage: Not everyone is successful
When you leverage a trade, you are trading with more capital than you actually have available. If you have around $500 at your disposal and buy Bitcoin with 10x leverage, you are trading Bitcoin worth $5,000. If the price then doubles, the investment is worth $10,000 and you can look forward to high profits.
However, if the price falls, it will also fall with 10x leverage. This means that the capital invested can also dissolve much more quickly. Once the loss reaches the staked amount (in this case $500), the trade is automatically liquidated. And the money is gone, even if the price stabilizes again.
Nevertheless, if you trade skillfully with leverage, you can theoretically secure high profits. However, the numbers speak for themselves: depending on the provider, up to 80 percent of investors lose the money they have invested.
Is leverage trading right for me?
If you want to be one of the 20 percent who make big profits with leverage trading on cryptocurrencies, you have to know exactly what you’re doing. Knowledge of the crypto market, general trading knowledge and the ability to keep a cool head are the absolute basic requirements for trading with leverage. If you think you meet these requirements, you could venture into leverage trading. Of course, you should only use money that you do not depend on.
Before you throw real money around in the leverage area, you can first get started with play money at most brokers and exchanges. This way you can test whether this particular trading method works for you or not. And if not, you can always create a savings plan and hodl.
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