Leverage Trading

[FrankTheTank1]

Hello,
is there any difference between a trade with 5.000$ with 1x leverage and on the other hand 100$ with 50x leverage?
The only difference I see is the liquidation price of course. But is there any other differnce?
Thank you all, Frank

[aoluain]

The biggest difference for me straight off is if you want to be guaranteed to be liquidated
or stopped out go with $100 @ 50x it will only take a couple of % of market movement
to trigger loss or stop.

Most experienced leverage traders only use 2 or 3x

When you hear "the market is over-leveraged"
they are referring to the absolutely  crazy high gambles like 50x and these either pump
the markets when the shorts get liquidated or dumps when the longs get liquidated

[Coin_trader]

Hello,
is there any difference between a trade with 5.000$ with 1x leverage and on the other hand 100$ with 50x leverage?
The only difference I see is the liquidation price of course. But is there any other differnce?
Thank you all, Frank

Technically your idea is correct since you understand the liquidation part since it's the only major difference for spot and leverage trading. Second is the interest fee per day for borrowing that money for your leverage trading. Lastly there's a maker and taker applied when you open/close your position so you should consider that tons of fee along with the liquidation price that you are watching.

[FrankTheTank1]

Thank you!

The problem came up as I found https://www.winrate.io/ A page for calculating profits in trading.

I putted in my both trades (100$ 50x vs 5.000$ 1x) (I used ByBit as exchange) and the results differ enormously. This is not clear for me, I thought the results should be equal.

[Mpamaegbu]

Most experienced leverage traders only use 2 or 3x

You're right and that could be because they've been beaten by losses occasioned by their early misuse of leveraging. Most noobs use high leverage because they tend to believe in hitting it big at once on profit while neglecting the axiom, "slow and steady wins the race." I know of someone who started with x25 even though they didn't have any basic trading skill apart from self-feelings and instinct. Though after some nerve wrecking experiences that person retraced their steps and is more calculative this day. Come to think of it, there are even experienced traders who steer clear of leverage trading at all cost.

[Bitcoin_Arena]

Hello,
is there any difference between a trade with 5.000$ with 1x leverage and on the other hand 100$ with 50x leverage?
The only difference I see is the liquidation price of course. But is there any other differnce?
Thank you all, Frank

Obviously the difference is the liquidation price which is very huge, and It has a very high impact on your win rate, risk and reward and the impact of a single loss on your portfolio

The problem came up as I found https://www.winrate.io/ A page for calculating profits in trading.

I putted in my both trades (100$ 50x vs 5.000$ 1x) (I used ByBit as exchange) and the results differ enormously. This is not clear for me, I thought the results should be equal.

The results can never be equal since your winrate will be affected alongside other factors

[Darker45]

You seem to be asking the wrong question. Trading with x1 leverage versus trading with x50 leverage is all about differences. There's almost no similarity at all. You should've asked what's similar between the two. You're actually comparing between no leverage, which x1 leverage essentially means, and high leverage.

If you trade $5,000 with x1 leverage, you're still trading with your own $5,000, no leverage at all. If you're trading x50 that means your $100 is like $5,000. But since the latter is magnified with x50, it means the potential profit and the potential loss are also magnified. So if you think of leverage trading, don't just think of your potential profit, think also of your potential loss. The higher the leverage, the higher the risk.

[odolvlobo]

Hello,
is there any difference between a trade with 5.000$ with 1x leverage and on the other hand 100$ with 50x leverage?
The only difference I see is the liquidation price of course. But is there any other differnce?
Thank you all, Frank

The difference is that you are investing X dollars in the unleveraged trade, and 50X dollars in the 50x leveraged trade. You get the other 49X dollars by borrowing them. In order to protected the lender, your position will be automatically closed by the exchange if it thinks that there is any chance that any of the 49X portion will be lost. Frequently, the position is closed and you are left with nothing. Typically, a 50x position will be closed if it is down a little more than 1%, and you will lose most or all of your money because whatever is left over after paying back the lender will be used to pay fees.

Another difference is that you must pay interest on the borrowed money.

[FrankTheTank1]

Thank you all!
I think, I should not use leverage before I get some experience.

[Poker Player]

Thank you all!
I think, I should not use leverage before I get some experience.

And if you ever use it, think about using the lower leverage the better. No matter how good you are, the more leverage and the longer you are using high leverage, the closer you get to 100% probability of being liquidated, that's why expert traders use low multipliers, because no matter how good you are, the market swings end up beating you.

I also tell you that from the trading houses leverage trading is promoted a lot, with ads like "deposit 1 and trade with 100", things like that, because at the end of the day they earn by commissions but if the traders in the stock market that earn money are very few, in the crypto market are even fewer and I would say that using leverage in the long term will be 0.

If You're Day Trading, You Will Probably Lose Money: Here's Why

    One study of Brazilian futures traders found 97% of day traders lost money over a period of 300 days.
    Another study of day traders in Taiwan between 1995 and 2006 found only 5% of day traders to be profitable.
    A study by the U.S. Securities and Exchange Commission of forex traders found 70% of traders lose money every quarter on average, and traders typically lose 100% of their money within 12 months.
    A study of eToro day traders found nearly 80% of them had lost money over a 12-month period, and the median loss was 36%.

[Oshosondy]

Most experienced leverage traders only use 2 or 3x

How did you know that most experienced traders uses 2 or 3x leverage? Did you have any data about that? I too can say most experienced traders uses no leverage at all but just 1x and also some decide not to go beyond 2x. But if we are talking about experienced traders, did you believe some can go as high as 5x during far volatile market in a way there has been a massive price drop, but the more leverage the more the certainty of liquidation.

[gabbie2010]

Hello,
is there any difference between a trade with 5.000$ with 1x leverage and on the other hand 100$ with 50x leverage?
The only difference I see is the liquidation price of course. But is there any other differnce?
Thank you all, Frank

Risk factor differs in both trades, leveraging a $100 trade with 50x is too risky infact any slight dump in the price of crypto pair traded will trigger a margin call by the exchange based on personal experience while trading with Binance, however $5 with 1x less risky though with a smaller profit, preferably adoption of cross margin which is 3x in Binance is quite reasonable coupled with a good trading strategy and money management a good and experience trader will earn a decent profit in a long run.

[AicecreaME]

Hello,
is there any difference between a trade with 5.000$ with 1x leverage and on the other hand 100$ with 50x leverage?
The only difference I see is the liquidation price of course. But is there any other differnce?
Thank you all, Frank

The $5,000 trade with 1x leverage is the slowly but surely trade, usually this kind of trade is for long term, while the $100 with 50x leverage is the high risk high reward trade, it is not recommended but if you love thrills and easy money and easy losing of your money, it is the best trading approach you should do. In short, the first one is for patient people while the last one is for impatient people.

[palle11]

Hello,
is there any difference between a trade with 5.000$ with 1x leverage and on the other hand 100$ with 50x leverage?
The only difference I see is the liquidation price of course. But is there any other differnce?
Thank you all, Frank

The difference is that they are both of different advantage. Taking a higher risk gives a higher profit and a lower risk taken is equals to a lower profit. Therefore for example trading with a 50x leverage against a 1x leverage is not the same. Professionally , it is better using a low leverage than a high leverage because if your prediction of trade goes wrong, your account suffers it.

[Peanutswar]

Using a leverage is you are allowing the exchange to borrow some money for your trade of course if you can't pay anymore it might get liquidated if you are making a trade with 1x looks like you are doing spot trading not futures trading but in the higher leverage this helps you to get more profit but if you make a mistake might ruin your wallet balance. Always trade what you are willing to lose.

[tvplus006]

I think, I should not use leverage before I get some experience.

The desire to earn quickly and a lot, forces beginners to use high leverage. Obviously, they consider this type of trading as a casino, while they expect to get only a positive outcome of the transaction for themselves. But the reality turns out to be different and they lose their deposit after one unsuccessful deal. Therefore, you made the right decision to delay margin trading.

[Oshosondy]

Using a leverage is you are allowing the exchange to borrow some money for your trade of course if you can't pay anymore it might get liquidated if you are making a trade with 1x looks like you are doing spot trading not futures trading but in the higher leverage this helps you to get more profit but if you make a mistake might ruin your wallet balance. Always trade what you are willing to lose.

That is true but I will not consider future trading as making a mistake because it is normal that if newbie start to trade using leverage, they will lose, even they will lose if they are just trading without leverage but the loss will not be as much as using future trading. I remembered when I started future trading, I used 125x all because the little I had was multiply by 125x, making it very huge amount, but I did not know that the liquidation price is very near which was what happened.

The desire to earn quickly and a lot, forces beginners to use high leverage. Obviously, they consider this type of trading as a casino, while they expect to get only a positive outcome of the transaction for themselves. But the reality turns out to be different and they lose their deposit after one unsuccessful transaction. Therefore, you made the right decision to delay margin trading.

Please what did you mean by unsuccessful transaction while trading, I do not think making transaction and trading are connected.

[lixer]

is there any difference between a trade with 5.000$ with 1x leverage and on the other hand 100$ with 50x leverage?
The only difference I see is the liquidation price of course. But is there any other differnce?

You may not feel any differences between leveraged trading and non-leveraged trading until market is in your direction (except the fee for availing leverage in terms of interest in some exchanges). But, when market turns against you then you will start feeling the heat. It means that you can wait up to $5000 movement with non-leveraged trading whereas you can wait only until ~$98 price movement in leveraged environment because after that it would be not your money hence you are not allowed to wait more.

In this high volatile bitcoin market, if your technical analysis are too accurate then you may go for leveraged trading like once you enter then market should keep going up; if you cannot generate that kind of accurate signal then you should trade only at spot market.

[tvplus006]

Please what did you mean by unsuccessful transaction while trading, I do not think making transaction and trading are connected.

I meant a unsuccessful deal, after which the trader usually remains without pants) Right now, the market is showing exactly such a movement that all those who hold a long position with a large margin and at the same time have not set a stop loss have already been liquidated or will be liquidated in the near future.

[Wind_FURY]

Hello,
is there any difference between a trade with 5.000$ with 1x leverage and on the other hand 100$ with 50x leverage?
The only difference I see is the liquidation price of course. But is there any other differnce?
Thank you all, Frank

No difference unless you want to throw your $100 away, and which could have been better if saved in Bitcoin. Nothing great was built overnight.

If we look at when you posted your question, and the current mini-crash, I believe your $100 with 50x leverage gamble didn’t last you more than a day.