In the cryptocurrency contract trading world, the most basic knowledge is:
Never open a full position; opening a separate position is the key!
Why?
Separate positions allow you to flexibly adjust margin and liquidation price, controlling risk a bit more.
Think about it, with the same 10x leverage, the liquidation price is clearer with separate positions, and you can adjust your positions in batches, avoiding a single mistake leading to eternal regret.
Here's a simple example:
Suppose a certain coin is currently priced at 100 USDT,
if you open 10x leverage, the liquidation price can fluctuate within a range of 10 USDT up or down;
if you open 20x, the liquidation price shrinks to a range of 5 USDT up or down;
if you open 2x, the liquidation price is 50 USDT up or down, which means you have more room and are less likely to be liquidated.
In fact, spot trading is equivalent to 1x leverage; a drop to zero results in a loss of 100 USDT, which is equivalent to a liquidation at 1x leverage in contracts.
There is no fixed way to determine leverage; the important thing is to adjust flexibly and follow the market.
If you are doing intraday trading, you can use relatively higher leverage, calculating based on the highest and lowest price differences over the recent days.
If the market fluctuates by several thousand points, if your leverage is set reasonably, the liquidation price will be safely distanced from you.
For medium to long-term trading, with an extended time frame, market fluctuations are larger and more uncertain, so leverage should be smaller, giving yourself more buffer space.
Different coins have different situations, and leverage also varies.
Popular coins fluctuate by 30% in 24 hours.
If you are still using 20x leverage, isn't liquidation just a matter of time?
Many beginners don't understand this detail; simply going for high leverage can result in severe losses.
So don't just focus on indicators; the market changes.
Leverage should follow the market and the time cycle.
Understanding how to calculate the liquidation price and adjust positions is key.
I am Xiao O, a professional analyst and educator, a mentor and friend on your investment journey! As an analyst, the most basic thing is to help everyone make money. I will resolve your confusion and issues, speaking with strength; when you are lost and don't know what to do, follow Xiao O, and I will guide you.
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