Some people ask how to define high leverage?
Many people have a misunderstanding about leverage, thinking that setting a high multiple means high leverage. In fact, the real "high leverage" depends on how much money you use to open a position.
Imagine that if you use U-standard contract trading, set a 10x leverage, but only use 10% of the total funds as margin, it is actually equivalent to not using leverage, just like buying spot directly. Similarly, using 5% of funds at 20x leverage, or using 1% of funds at 100x leverage, will have similar effects.
The real key lies in your "total position leverage", that is, the ratio of your total funds to the amount of the position opened. If this ratio exceeds 3 to 5 times, it can be considered high leverage. For example, you have 100,000 funds, but open a 400,000 exchange + KX40198 position, which is 4x leverage, and the risk is extremely high.
In order to pursue high returns, some people directly use all funds as margin to trade, and the leverage can reach 10 times, 20 times or even higher. This approach is like walking on a tightrope, and a little carelessness may cause serious losses. If it is so easy to make money, the world's richest man would have been a household name.
Therefore, it is almost impossible to make a profit in a high-leverage environment. Investment should be stable, and you should not be confused by high returns. Reasonable control of your leverage ratio is the long-term plan.
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