WHY I SAY THAT LEVERAGE TRADING IS DANGEROUS?
THIS IS THE REASON:
Leverage trading amplifies both gains and losses, so a small price move against you can wipe out your entire margin fast. Key risks worth highlighting:
- Liquidation risk: exchanges can automatically close your position if losses eat into your margin, sometimes locking in losses at the worst possible moment.
- Volatility magnification: crypto's normal price swings can trigger margin calls that wouldn't matter in spot trading.
- Funding/borrowing costs: holding leveraged positions over time costs fees that erode profits.
- Emotional decision-making: the speed and size of swings often leads to panic exits or revenge trading.
- Compounding losses: unlike spot, you can lose more than your initial investment in some setups.
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