Beginners Must Read: Leverage is a Magnifying Glass; Use it Right to Seize Big Opportunities

Recently, some fans asked how to use leverage, so today we will thoroughly discuss this "magnifying glass"—used well, it can seize big opportunities; used poorly, it can magnify losses. Remember these points to reduce tuition fees.

1. Start with Low Leverage; Stay Alive First

Newbies should avoid high leverage! It is recommended to start with 1-5 times leverage; although the profits are smaller, it can save your life.

For example, with 5 times leverage, if the coin price fluctuates by 20%, the principal could be halved. Leverage within 10 times is the safe zone; over 20 times? It’s basically gambling. Experts rely on strategies and risk control, not on luck.

2. Position Management: Don't Put All Your Eggs in One Basket

For a single trade, don’t invest more than 5%-10% of your total funds. For example, with a 10,000 USDT account, use at most 500-1000 USDT for one trade.

The higher the leverage, the lower the position must be—when using 10 times leverage, cut the position by half compared to 5 times leverage, so that you can withstand the fluctuations.

3. Stop Loss! Stop Loss! Stop Loss!

"Always set a stop loss when opening a position"—saying it three times isn’t enough. No matter how optimistic you are about the market, the stop loss line must be set according to your risk tolerance and technical analysis. Don’t fantasize about "holding on a bit longer" when losing, and don’t secretly move the stop loss line—this is the beginning of disaster.

4. Go with the Trend, Don’t Fight the Market

Leverage is most suitable for clear trends, such as a one-sided rise or fall. Chasing high leverage in a volatile market is like giving money to the big players.

When the market direction is wrong, don’t add leverage against the trend, and don’t think that "after a big drop, a rebound is inevitable"—the market has its own rhythm, which you cannot control.

5. Maintain a Stable Mindset; Leverage is a Tool, Not a Gambling Device

Leverage amplifies capital efficiency; it’s not a way to get rich overnight. Set reasonable profit targets, take profits when earned, and don’t pin all your hopes on "the next wave of greater increases."

Remember: Leverage is a weapon; used well, it can lead to steady profits; used poorly, it becomes a gambling tool.

Summary: Low leverage, small positions, strict stop losses, follow the trend, and maintain a stable mindset—if you achieve these five points, leverage can become your helper, not a pitfall.

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