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Leverage: The Sweet Poison in Crypto Trading

Imagine being told you can turn your $100 into $1,000 instantly. Sounds great, right? But this magic trick can turn into a nightmare faster than you think.

# Breaking It Down: How Leverage Works

For simplicity, let’s use the current prices of Bitcoin ($67,500) and Ethereum ($3,200).

10x Leverage

- You have $100.

- With 10x leverage, you’re trading $1,000.

- If Bitcoin moves 1% ($675), your position changes by $67.50.

- A 1% move either gains or loses you $67.50—67.5% of your capital. A 10% move wipes you out completely.

100x Leverage

- You have $100.

- With 100x leverage, you’re trading $10,000.

- If Ethereum moves 1% ($32), your position changes by $320.

- A 1% move either gains or loses you $320—320% of your capital. A 0.5% move erases your funds.

# The Ugly Truth: Leverage Doesn’t Boost Your Profits

Leverage doesn’t increase your profit amount; it just boosts the percentage gain.

Without leverage, a 1% gain on $1,000 nets you $10. With 10x leverage on $100, the same 1% gain still nets you $10.

The profit remains the same, but the risk skyrockets.

# Isolated vs. Cross Margin

Isolated Margin:

- Limits your risk to the specific trade.

- If the trade goes bad, only the margin in that position is affected.

Cross Margin:

- Shares margin across all your positions.

- If one trade fails, it can drag down your entire account.

The Harsh Reality

Leverage feeds on the greed of small retail traders with portfolios under $200, dreaming of quick wealth. But leverage is a trap that often leads to disaster.

Leverage is a dangerous illusion. Stay disciplined, manage your risks, and avoid the high-leverage bait.

Smart trading is about steady growth, not fast gambling.

#RiskManagement #binancelearntoearn #Bitcoin_Coneference_2024 #TradingMadeEasy