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What Is Leverage Crypto Trading?
Investors who want to increase their capital exposure from their original crypto market investment to increase earnings use leverage crypto trading. It describes using borrowed funds or crypto assets to acquire or sell cryptocurrencies and boost one’s purchasing or selling power.
For example, If you have $1000 worth of Ethereum(ETH) in your wallet and want to leverage your long position because you predict the price will rise, you can borrow money to purchase more ETH if your leverage ratio is 1:10(10x). You use just $1000 of your fund to complete a deal for $10000 while increasing your starting capital ten times. Remember there is a significant danger involved in using leverage in crypto trading, particularly in a turbulent market.
Your margin account’s danger of being liquidated increases with leverage.
Before using leverage, you should be knowledgeable about the crypto market and the risks and return mechanisms associated with cryptocurrency investing. The market is erratic and unpredictable. And if you don’t use the appropriate trading tools and a disciplined approach to leverage your cryptocurrency trading, you might quickly lose the money you invested.
The process of trading cryptocurrencies or other financial assets using borrowed funds is also called financial leverage. It gives you additional buying or selling power and lets you deal with money that’s bigger than you have in your wallet. Depending on the cryptocurrency exchange or broker you use to access leverage crypto trading, you can be able to borrow up to 100 times your account amount.
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