📊 Educational Experiment: The cost of (120x) and the illusion of ($0.20).
... . Today I conducted a "suicidal" operation to demonstrate the risks of extreme leverage. The goal was to capture just ($0.20) of net profit in a bearish market.
The results in figures are as follows.
* Initial state ((PnL 365D): -$13.29 (-0.57%)).
* Final state ((PnL 365D): -$14.93 (-0.64%)).
* Cost of the experiment: (-$1.64) approximately.
Was it possible to gain those ($0.20) $BTC ?
Technically yes; but, the odds were mathematically against due to the commission structure.
The burden of commissions: When operating at (120x), the opening and closing commission is calculated on the notional value (capital × 120). To obtain ($0.20 net), the price had to not only move in favor but also first exceed the cost of the "toll" for entry and exit, which at this level of leverage consumes a large part of the margin.
Zero error margin: With a bearish sentiment, any bounce less than (0.8%) against liquidates the position before the price can even reach the breakeven point after commissions.
Conclusion: Although the market may have moved in favor, the "Risk/Reward" ratio is absurd. Risking (100%) of the margin to seek a profit that barely covers the fees is the fastest way to degrade the annual PnL.
Lesson of the day: Success in trading is not just about the "Win Rate," but understanding that at (120x) you are not trading against the chart, you are trading against commissions and minimal volatility.
#CryptoEducation