ETH leverage trading is a way to capitalize on the volatility in the market. It allows traders to borrow funds and buy coins with a higher price to sell them at a later date when they are worth more. With leverage trading, they might only need to put down 5% of the total amount of money they are investing.
What is ETH leverage trading?
Leverage trading is a trading strategy that uses borrowed funds to increase the potential return on investment. Traders who use leverage trade with a ratio of 1:1 or greater. This means that for every $1,000 deposited in their account, they are allowed to borrow $10,000. ETH leverage trading allows traders to increase their profits by taking advantage of the spread between the buy and sell prices. When the price of an asset moves relatively sharply either up or down, it can be profitable for a trader to use leverage to buy more of the asset and sell it later at a higher price. This strategy increases the potential return on investment by magnifying the effect of small price movements.
Why is ETH leverage trading important?
Leverage trading is an important part of cryptocurrency trading. It allows traders to increase their profits by using a smaller amount of capital to buy a greater number of assets. ETH leverage trading is especially useful because it allows traders to take advantage of the price movements of Ethereum while keeping their investment relatively small. ETH leverage trading also allows traders to trade cryptocurrencies with a minimal level of risk. Visit https://www.btcc.com/, If you’re interested in starting to trade Ethereum.
How to leverage trade on ETH
Most people think of leverage as being used in short-term investments, such as stock options or futures. However, you can also use leverage to make trades on ETH. Here’s how:
Start with a position that you’re comfortable with. For example, if you buy ETH at $300 per coin and the market goes up to $330 per coin, your profit would be $30 per coin. However, if the market went down to $290 per coin, your loss would be $60 per coin.
Now add a margin loan. This will allow you to trade more coins than you originally bought, without having to sell any of your original coins. You can borrow up to 3X the amount of coins you originally bought, for a total of 6X. So if you originally bought 100 ETH coins, you could borrow 600 ETH and still have 100 coins left after the loan is repaid.
Now let’s trade. Go ahead and open a trade at $290 per coin. If the market goes down further, your losses will increase because you will owe more money on the margin loan. However, if the market goes up even further, your profits will increase.
BTCC allows you to trade Ethereum with leverage. This means you can trade Ethereum using your Bitcoin or USDT without taking delivery of the ETH. With leverage you get a lore more exposure to the Ethereum price movement than the amount you deposit. As an example, say the ETH price is 2,000 USD and Vitalik Buterin is about to make a speech where he is announcing some important features to be added to the Ethereum blockchain. You believe this will make the price go up to 2,500 USD. You deposit 1,000 USD and you wish to buy 25 ETH with 50X leverage. At 50X leverage, your margin requirement is 1/50 * 2,000 * 25 = 1,000 USD.
If the market increases to 2,500 USD – then your profit is 500 * 25 = $12,500. However, if the Ethereum price goes down by 40 USD down to 1,960 USD then you would lose your entire 1,000 USD.
A similar example can be applied if you are expecting Etherem to go down in value. Let’s say ETH is currently trading at 2,000 USD and you expect the price to fall by 500 USD. You buy the same quantity of ETH with 50X leverage, therefore your margin is 1/50 * 2,000 * 25 = 1,000 USD. If the price falls by 500 USD down to 1,500 USD, then you stand to make 25 * 500 = 12,500 USD profit. However, if the market moves up by a mere 40 USD, then you stand to lose the entire 1,000 USD.
Benefits of Trading Ethereum
After Bitcoin, Ethereum is the second-largest cryptocurrency by market capitalisation with several other ERC20 tokens built on top of it. Its average daily trading volume is $35 billion USD – making it very liquid for trading. As Ethereum is the choice platform for most DeFi applications, it continues to grow in popularity as more platforms build on it.
Just like Bitcoin, the Ethereum trading market is open 24 hours a day, 7 days a week, including public holidays. Ethereum block explorers can provide a lot of insight to traders on the current movements of tokens and Ethereum itself. You can also estimate and predict movements in the Ethereum price that can be triggered by lack of network capacity due to complex applications being in demand.
If you’re interested in starting to trade Ethereum, then learning about leveraged trading may be the perfect first step for you. Leveraged trading is a method of investing that uses borrowed money to amplify gains or losses in the securities being traded. Because leverage magnifies investments by a multiple, it can be dangerous if used incorrectly. However, using proper risk management techniques and following specific rules when trading with leverage can help ensure that your investment remains safe and profitable.