⚡️ What is LEVERAGE? The Double-Edged Sword ⚔️
Hello, traders! You have mastered Spot trading, but you have surely seen the option to trade with Leverage in Binance futures.
It is a powerful tool, but it must be treated with great respect!
1. What is Leverage? 🤔
Leverage is borrowed money from the exchange (Binance) so that you can open a position much larger than you could with your own capital.
Example: If you have $100 USD and use 10x leverage, you can open a trade worth $1,000 USD. Your capital is "multiplied" 10 times.
2. The Double-Edged Sword (The Risk of Liquidation) 📉
The Risk: Gains are magnified, but losses are too. If the market moves against you, even a small movement can cause you to lose all your initial capital.
3. Responsible Use (The PRO Rule!) 🛑
If you decide to use leverage, do it with these two strict rules:
Low Leverage: To start, do not use more than 3x or 5x. Avoid 50x or 100x at all costs.
MANDATORY STOP-LOSS! (Parts 4 and 5) When you use leverage, the Stop-Loss is not an option, it is the only barrier that prevents the complete liquidation of your account!
Remember: Leverage is only for advanced traders who already master risk management.
Be smart and respect the risk! Your account will thank you.
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👇 Question: What is the highest leverage you have seen used and what did you think?
