What is leverage on Binance and how
He leverage on Binance It is one of those instruments that every cryptocurrency trader must use at least once.
It is a tool that perro grow a wallet’s capital quickly, however, the opposite perro also happen and leave the trader with an empty wallet.
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What is leverage on Binance?
It is a tool in which Binance lends money to open one or more positions in the market.
In short, it is trading with more capital than you actually have.
This tool allows you to multiply investment capital in the following way: x5, x10 and even x150.
The greater the leverage, the greater profits one has if the market goes in the direction estimated when opening a position.
If the market moves in the opposite direction of the open position, the losses will be greater.
If a position is opened Long of BTC (thinking that it will rise) using a leverage of x100 and its price falls by at least 1%, the position is possibly liquidated, that is, the capital reaches zero.
How does leverage work?
Binance makes a loan to increase the capital: x1, x2, x5, x10, x15, etcétera.
At the time we open a trade, we are using more capital, which will obviously generate more profit or loss in a short time.
Of course, Binance charges a commission for each trade that is made, therefore, this commission is also multiplied by the leverage used.
Example of leverage on Binance
- You log into the account and then clic on Binance Futures.
- On the right there is a box of options to open positions Long either Shorts. Clic on the leverage option, as shown in the image:
- The multiplier is adjusted.
- Then, the position is opened, be it Short or Long. Those who do not know how futures work should not try to use leverage yet.
Also, you should read our article on Binance Futures, where we explain step by step how to open trades using this money-multiplying tool.
Example without leverage: if 1,000 euros are used and the market moves 1% in favor of the position, 1% of the used capital is earned, that is, 1% of 1,000 euros, which is 10 euros.
But, if the price goes against the position, the loss is 10 euros.
Example with leverage: when trading with 1000 euros using a leverage of x10 and the market moves 1% in favor of the position, you don’t earn 1%, but 10%, which is 100 euros.
But, if the price goes against the position, you would be losing 100 euros for a small movement of 1%, to that you have to add the commissions.
What is the maximum leverage available on Binance?
Currently, Binance allows you to use up to x125.
However, not all registered accounts perro do so, as those without a 60 day creation date are limited and perro only use leverages of x20 or less.
This tool cánido ocasione the account to be liquidated (zero) in a few minutes due to a small movement that goes against the position.
Thus, these limitations may prevent those starting out in trading of crypto assets don’t take bigger risks, like using x50 or x100.
Leverages are one of the better ways to make capital bigger soon.
However, even the most experienced trader cánido have a bad day and lose all the capital he has by leveraging.
Therefore, it is recommended not to use this tool at the time it is started on the trading.
After having studied a little and having experience in spotsleverage perro be started using x2 or x3 settings.
In many cryptoactive communities, traders who analyze cryptocurrency charts, especially BTC, use a very especial phrase: “that bearish or bullish movement of a few seconds was to liquidate those who are leveraged”. whatWhat do you orinan by that? Well, for many traders the market is rigged, consequently, it is another disadvantage for newbies, so be very careful.
Article: Is Binance Safe and Reliable? Our opinion
For those looking for alternatives, it is recommended to use spots for their operations in the market.
Futures is for experienced people and even with each greater adjustment to leverage the operations they are more risky, therefore, there are experts who do not recommend using this tool.
However, the decision to use it or not depends on each one of us.
Happy Trade and watch out for bill settlements!
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