By using leverage, traders can increase the size of their positions and increase their potential profits, but they could also suffer much greater losses.
Leverage can also improve the liquidity of traders’ capital, so they can maintain the same position size with a lower collateral requirement instead of holding a two-fold leveraged position on a single exchange. In this case, they would be able to use the other portion of their money to trade another asset, stake, provide liquidity to a decentralized exchange (DEX), invest in NFTs, etc.
With leveraged trading, how do you manage risks?
Using high leverage might reduce the capital you need to start trading, but it increases the likelihood that you will liquidate. Even a 1% price movement can cause huge losses if your leverage is too high. Using lower leverage gives you more margin of error to trade. The higher your leverage, the smaller your volatility tolerance is. Therefore, BTCC and other crypto exchanges limit the maximum leverage new users are allowed to use.
The use of stop-loss and take-profit orders in Leverage Trading Crypto helps minimize losses. You can use stop-loss orders to automatically close your position at a specific price, which can be very useful when the market moves against you. A stop-loss order can protect you from significant losses. On the other hand, a take-profit order automatically closes when the price of the trade reaches a certain value, allowing you to lock in your earnings before the market conditions turn around.
At this point, it should be obvious to you that leverage trading is a double-edged sword that can multiply both your gains and losses exponentially. BTCC encourages you to trade responsibly by taking responsibility for your actions. It involves a high level of risk, especially in the volatile cryptocurrency market. Our tools include anti-addiction notices and cooling-off periods so you can exercise control over your trades. Don’t forget to DYOR your trading strategies and use leverage properly, and you should always exercise extreme caution.
On BTCC, how do I use Margin Trading?
The concept of leverage can also be found in other types of trading, such as Crypto Trading Platform like BTCC. In this article, we will show you how to get started with Margin Trading, but leverage can also be found in other trading types. If you haven’t already opened your Margin account, follow this FAQ article to do so.
- Select [Trade] – [Margin] from the top navigation bar.
- Using the BNB/USDT pair, we will trade the BTC/USDT pair. Click on [BTC/USDT] to find the pair you want to trade.
- Click [Transfer Collaterals] below the candlestick chart to transfer funds to your Margin Wallet.
- To transfer funds, select the wallet, margin account, and coin to transfer. Enter the amount and click [Confirm].
- Choose from the box on the right either [Cross 3x] or [Isolated 10x]. The margin in Cross Margin is shared between your Margin accounts, whereas the margin in Isolated Margin is independent for each trading pair. This FAQ article discusses the differences between the two.
- Specify whether you want to buy (long) or sell (short), along with the order type. Select [Borrow] and you’ll see that the 100 USDT we transferred to the Cross Margin account has been multiplied 3x, to 300 USDT.
- In order to buy BNB with leverage, enter the amount of USDT divided by [Total], or the amount of BNB desired by [Amount]. Alternatively, you can drag the bar below to select the percentage of available balance. You will then see the amount you will be borrowing for this trade. To open the position, click [Margin Buy BNB].
Depending on your VIP level, you will be unable to use all of your available balance because you must pay a trading fee.