What is Leverage in Crypto? (And Why You Should Be Careful) ā ļø
š§Ø Leverage can multiply your profits ā or your losses. Learn it before using it.
š What is Leverage?
Leverage allows you to borrow funds to trade a larger position with a smaller amount of capital.
š Example:
You have $100
With 10x leverage, you can trade as if you have $1,000
š If the price moves +5% ā You earn +50% profit
š„ But if it drops -5% ā You lose all your $100 (liquidated)
š§ Terms to Know:
Margin: Your actual money in the trade
Leverage: The borrowed multiplier (e.g., 5x, 10x, 20x)
Liquidation: When your loss hits 100% of your margin
Funding Fee: Small charge for holding positions in futures
š„ Why Beginners Should Be Cautious
ā Very high risk
ā Can lose your capital in minutes
ā Emotional pressure increases
ā Small mistake = big loss
> ā
Start with 1xā2x if you must
ā
Never use 20x+ unless you're experienced
ā
Always use Stop-Loss
ā
When Leverage Can Be Useful
Short-term trades (scalping, day trading)
Hedging in volatile markets
With strong strategy, TA, and SL in place
š Where to Use Leverage
š§¾ Binance Futures
š§¾ Binance Margin Trading
But remember: Leverage is a tool, not a shortcut.
š” Pro Tip:
> āLeverage is like fire ā it can cook your food or burn your house.ā
š Follow for daily tips, trading guides and practical crypto lessons.
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