A Precise Guide to Crypto Trading with Leverage

princeofpeace

princeofpeace

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So, you're eager to dive into crypto trading and make some serious gains. Let me guide you through the essentials, starting with leveraging your trades and understanding the risks involved.

Leverage:

Leverage is like turbocharging your trades—it lets you control a larger position with a smaller amount of your own cash. But be warned: while it can boost your gains, it can also lead to devastating losses if you're not careful.

Let's break it down with an example. Say you've got $100 to trade with. Without leverage, you could make a modest $5 profit on a $100 investment if the price of ETH goes up by 5%. But with 10x leverage, suddenly you're trading as if you have $1000 in the game, you're borrowing capital from the exchange. Now, that same 5% increase in price translates to a whopping $50 profit (5% x 10x leverage = 50%). Sounds enticing, right?

But here's the catch, if the market turns against you, leverage can turn your losses into a nightmare. For instance, if you leverage 10x on ETH at $3000 and it drops by 10%, that's not just a 10% loss—it's a 100% wipeout of your initial investment. The exchange will step in to liquidate your position to prevent further losses and going into a negative and owing money to the exchange (if you trade leverage, this is unpreventable. No exchange is going to want to call you 5x a day to ask to deposit what you owe, they will close you out if your losses meet your initial trading investment).

Leverage Levels and Risk Management:

Understanding leverage levels is crucial for managing risk. Here's a breakdown:

- Leverage 5x: A 20% drop in price is equivalent to the coin dropping 100%.
- Leverage 10x: A 10% drop is equivalent to the coin dropping 100%.
- Leverage 20x: A 5% drop is equivalent to the coin dropping 100%.
- Leverage 50x: A 2% drop is equivalent to the coin dropping 100%.
- Leverage 100x: A 1% drop is equivalent to the coin dropping 100%.


100 divided by leverage amount = percentage difference to get liquidated.

While it might be tempting to go all in with high leverage for a chance at massive gains, it's a risky move. Stick to leverage levels you're comfortable with, ideally staying within the 5-15x range for most trades.

And remember, on average any crypto coin will move back and forth, up and down, 5-10% a day. Some days it can skyrocket 20-30%. So trading at a leverage higher than 10 is risky, you should never go above 20, it's gambling. 15-20x leverage is for when you are EXTREMELY confident in a trade and are 100% certain you "timed" the market (lol).

Long vs. Short Positions:

Understanding long and short positions is fundamental to crypto trading:

- Long Position: Buying a cryptocurrency with the expectation that its price will rise. You profit by selling it later at a higher price. However, if the price drops, you incur losses, and if you're on leverage, excessive losses can lead to liquidation.

- Short Position: Selling a cryptocurrency with the expectation that its price will fall. You profit by buying it back later at a lower price. Conversely, if the price rises, you incur losses, and again, excessive losses can lead to liquidation.

Practical Tips for Success:

- Start with BitMex Testnet: Use BitMex's simulated market to practice your trading strategies without risking real money. It's a great way to hone your skills and test different approaches.

- Daily Trading Routine: Make trading a daily habit, regardless of your level of expertise. Practice makes perfect, and consistent trading will help you refine your skills over time. You also will subconsciously know what the average prices are for a period of time and can use this information to determine if you feel a coin is being under/overvalued and trade accordingly. Keeping up with the charts is like keeping up with the news in the world. If you can check tiktok daily you can check the charts daily, it takes WAY less time.

- Focus on Fewer Coins: Instead of spreading yourself thin across multiple coins, focus on mastering one or two. Treat each coin's chart as a language to learn, and become proficient in interpreting its movements. Too many charts = overcomplicating and confusing yourself.

- Prioritize High-Volume Coins: Stick to coins with high trading volume and market cap for more liquidity and movement. Low-volume coins tend to move slowly, making them better suited for long-term positions.

In conclusion, leveraging your trades can be a powerful tool for maximizing profits, but it comes with significant risks. By understanding leverage, mastering long and short positions, and practicing disciplined trading strategies, you can navigate the crypto market with confidence and potentially unlock significant gains.

I've added some PDFs of good trading books for you to download and learn with, but absorb as much knowledge as you can from videos too.

I hope this guide has given some value to someone here!
 

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Reactions: VivaCristoRey, Delikate2900, radicalrationalist and 6 others
i'll read it later, nice thread bro
 
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What YouTube channels can you recommend? are there any group buys of expensive trading courses anywhere? ( or even for free lol)
 
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What YouTube channels can you recommend? are there any group buys of expensive trading courses anywhere? ( or even for free lol)
One of the best traders I keep up with is Crash Trading on YT - @crashiusclay69 on Twitter. He perfectly called the top of BTC last bull and I managed to short at 100x leverage because of that and if I wasn’t so new and stayed in my trade I’d have made 40k but I exited for a $1000 too early that same day
 
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Reactions: onlyhereforthehair
Leverage always felt like gambling to me because i'm too ignorant on the subject but its tempting to try your luck and go high leverage.
Personally how much did your start with and how much do you have now ?
Do you trade every day and how much profits a month do you generate through this activity ?
 
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Reactions: Pride
Leverage always felt like gambling to me because i'm too ignorant on the subject but its tempting to try your luck and go high leverage.
Personally how much did your start with and how much do you have now ?
Do you trade every day and how much profits a month do you generate through this activity ?
I started with a few hundred and made thousands last bull season, I am now starting to trade again. I quit because last season I put all my money in a shitcoin with high hopes but a trading bot liquidated everyone including myself by mass selling on tens and hundreds of accounts, may have been a scam by owner. Lesson is, only engage with shitcoins if you know enough on shitcoin trading and are able to lose the money you put in, assume 10% chance of success, don't put all your eggs in a basket.

I trade daily right now on my simulated trading account, I actually switched from BitMex to Phemex Mock Trading because I plan to use Phemex as my trading medium since I am used to it and I like the interface on mobile. So far from my simulated trades on both I am up 10% on my simulated account balance, some trades larger than others, most trades are wins.
 
I started with a few hundred and made thousands last bull season, I am now starting to trade again. I quit because last season I put all my money in a shitcoin with high hopes but a trading bot liquidated everyone including myself by mass selling on tens and hundreds of accounts, may have been a scam by owner. Lesson is, only engage with shitcoins if you know enough on shitcoin trading and are able to lose the money you put in, assume 10% chance of success, don't put all your eggs in a basket.

I trade daily right now on my simulated trading account, I actually switched from BitMex to Phemex Mock Trading because I plan to use Phemex as my trading medium since I am used to it and I like the interface on mobile. So far from my simulated trades on both I am up 10% on my simulated account balance, some trades larger than others, most trades are wins.
Telegram bot ? Used one before it was not very good either.
Shame you lost money because of that
Do you do analytical trades or more like following the news and trying to catch an increase or decrease in price based on that
 
pretty horrible advice actually.

just remember winners average winners and the best narrative is price going up. follow hsaka
 
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This guide sucks jfl all it talks about is leverage
 
why don't people leverage 100000000x and sell immediately when it goes up slightly?
 
why don't people leverage 100000000x and sell immediately when it goes up slightly?
That amount of leverage is impossible, the crypto exchanges offer max 100. Coins can rise and fall between half a percent to 2% very quickly, in seconds, you would instantly get closed out and liquidated off the fees. And because there's a difference between mark price and last price, the price at which you can buy or sell for long or short can change or be different than the price displayed, so let's say you buy ETH at 3000, with $100. You can immediately be down $5 because the mark price is lower than the last price. And when you trade you want to account for fees in your profit
 

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