Many beginners in contract trading
When he sees the leverage multiple
Will unconsciously pull the leverage multiple to the maximum, to 50 times or even 100 times
Actually, you may not know
This small leverage multiple
It is often a key point that determines the profit and loss of this trade or your entire trading career
What leverage do you open for your liquidation risk to be the smallest?
This involves two key points
One is the leverage multiple shown by the exchange (usually defaults to 20 times)
There is also the actual leverage ratio
What is the leverage multiple shown by the exchange
Click here on the leverage multiple
Many even feel that pulling to 10 times or 20 times doesn't matter
Because when it was designed that way, it will entice you to open 25 times, 50 times
After you set it to 30 times
The platform allows me to open a maximum of 30 times
For example, now my margin amount is 10 dollars
After I set the leverage multiple, I am allowed to open a maximum of 300 dollars
Many beginners do not understand the terrifying maximum allowable opening
If the real estate policy is relaxed
At this moment, you have 500,000, would you dare to open 20 times leverage to buy a 10 million house?
This way, it is equivalent to trapping you for the rest of your life
The leverage multiple for buying a house is the same as the leverage multiple for opening contracts
The higher the multiple I am allowed to open, the more we cannot do that
What you should ultimately look at is the actual leverage ratio
The actual leverage ratio has a very simple and clear formula: Position value ÷ Opening margin
Whenever you do any contract, it will show you the position
Is it displayed in terms of the number of varieties or in terms of the amount in U
For easy calculation, it is recommended to adjust to U
Using the dollar value corresponding to the position ÷ available margin dollar value, this is the actual leverage ratio
Now available is 10u, at this time the maximum allowed position is 300u
If you fully leverage the position, it is equivalent to opening 30 times leverage completely
A slight fluctuation will wipe it out
If you want to lower the actual leverage ratio
You can enter 11 in the position settings, what is the leverage multiple? It is 11➗10, the actual leverage multiple is 1.1
If you adjust the position by 10, it is actually equivalent to opening 1 time leverage
If you are still worried about the position, you can enter 9
Using 9u of position value divided by 10u, the actual leverage multiple is only 0.9, which makes it less likely to be liquidated
Someone might ask
Since the leverage multiple of the exchange is the maximum position I am allowed to open, why not just fully leverage it?
Fill it in yourself every time you place an order
According to the available quantity, this time place 50, next time do 100
Actually, once the leverage multiple is set high, it gives you the possibility of making mistakes
If you want to be disciplined and earn money from the market, set the leverage multiple to 3 times
Even if you open an order in your worst state, even if you fully leverage the position, your leverage multiple is only 3 times
What does the leverage displayed below the position mean?
This is adjusting the leverage multiple of the current position
Actually, no matter how you adjust, your position value will not change; the only things that will change are the opening margin and the displayed profit rate
But it will affect the position value when you add positions
For example, if the current position value is 100u, with a leverage ratio of 10 times, the opening margin corresponds to 10u (Position value = Opening margin × Leverage multiple)
If at this time you adjust the leverage multiple to 20 times, your position value will still be 100u and will not change, but the opening margin becomes 5u (available margin will increase)
Re-adding positions will calculate the position value based on the adjusted 20 times
This operation only increases the capital occupation rate, leaving a little operating space
