How to Use a Leverage in Contract Trading? – 58 COIN
Let’s take a look at the 100x leverage in the market.
If to open short 80 contracts with 100 leverage, ignoring the fee, 80 USDT is required as the margin. That said, investors can complete an 8,000 USDT transaction with the cost of only 80 USDT.
When the BTC price rises from 8,000 USDT to 8,050 USDT, the comparison between 1x and 100x leverage is as follows:
This is the 100x leverage under the margin system.
To leverage large funds with small funds, rich leverage is essential. Concerning this issue, many investors will choose an authoritative exchange in the industry, such as 58COIN.
58COIN pioneered the 100x perpetual contract in Asia, exceeding 80% of the old and new exchanges in the industry. At present, there are eight leverages available at 58COIN, 2x, 3x, 5x, 10x, 20x, 33x, 50x, and 100x, providing investors with a variety of leverage options.
4. Co-existence of Benefits and Risks
Notably, the use of leverage is a double-edged sword, lying in the fact that the profit or the loss it generates can be substantial.
When calculating the profit and loss after using leverage, instead of applying the used margin, the result is based on the enlarged amount of funds.
Suppose that the Bitcoin price is $8,000, an investor believes in the bullish trend and pays 1%, $80 as the margin to open long.
If the BTC price indeed rises and soars to $9,000, then the investor makes a net profit of $1,000, equivalent to 0.11BTC, with a profit rate of 1250%.
However, if the BTC price falls and drops to $7,000, then the net loss of the investor is $1,000, equivalent to 0.14BTC, and the yield becomes -1250%.
Assets borrowed via leverage can be applied to multiple financial tools, bringing potential returns to investors. Also, professionals attach great importance to leverage, which allows them to trade a large number of positions without having to invest all their capital in spot transactions with a certain risk.
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Published at Thu, 16 Jan 2020 07:12:26 +0000
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