Easily to make $20 from your $100 initial investment.
In order to avoid liquidation and maximize potential returns, you can use 5x leverage on Futures. This allows you to control a $500 position, aiming for a 4% price movement in your favor. Ensure to set proper stop-loss orders to avoid liquidation and keep your risk manageable.
Execution Strategy:
With $100, use a leverage of 5x (or lower) for less risk. This means you can control a $500 position.
To make $20, a 4% price movement on a $500 position will give you the desired profit. Thus, you will need to aim for a 4% price change in your favor.
Position Size = $100 × 5 = $500
Profit = $500 × 0.04 = $20
Don't forget to set the calculating Stop-Loss and Risk Management
A crucial step is to set a stop-loss to protect your account from liquidation.
Futures will liquidate your position if your margin is not enough to cover your losses. Typically, a 10x leveraged position can be liquidated if your position loses 10%.
Stop-Loss Calculation: With 10x leverage, a 10% loss in the market price will trigger liquidation. Therefore, you need to ensure your stop-loss is set carefully to avoid this.
Example: If your position size is $1,000, a 10% loss means a $100 loss, which would wipe out your entire margin.
Therefore, it’s recommended to use a more conservative leverage (e.g., 5x) or set a stop-loss to 5% to reduce the risk of liquidation.
Trading futures can be profitable, but it's highly risky. Always test strategies with small amounts and only trade what you can afford to lose.