Leverage on #Binance allows you to trade with more capital than you possess, multiplying gains (and also losses). It is adjusted on futures and margin platforms, allowing you to trade with amounts like 3x, 5x, or 10x, for example. It is crucial to manage risk, as an adverse market movement can lead to the loss of the invested capital if not handled properly.
Functioning
Capital multiplication:
If you have $10 and use a leverage of 10𝑥, you can trade with $100. This means that a 1% gain on the trade turns into a 10% gain on your initial capital.
Loss multiplication:
Similarly, losses are also amplified. If the market moves against you, losses can quickly exceed your initial investment.
Interest rate:
When borrowing capital, you incur an interest rate that accumulates hourly and is calculated on the borrowed amount.
In conclusion, leverage is a financial tool that, when well managed, helps us multiply income. We must always take into account the risk that is also generated by using it to maintain balance and thus achieve the desired results.
$TRADOOR
