Do not use more than 2x leverage

[Oshosondy]

I am referring to Vitalik Buterin, one of the ethereum founders post on Twitter that states that people should not use more than 2x leverage.

Don't use >2x leverage. Just don't.

It is one of the things he listed as a financial advice. As a trader, what do you think about it? We set some money aside for trading and as for me I still use up to 2.5x leverage for bitcoin to open a long position.

I think using this low leverage is good for traders. But investors should not use leverage at all. Investors should even supposed not to leave coins on exchanges but moved the coins to a noncustodial wallet.

This is also not applicable to many coins that are very volatile in a way that 1x leverage can even lead to liquidation of asset. See what happened to TRB recently that fall from almost $700 to $125.

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[Casdinyard]

I am referring to Vitalik Buterin, one of the ethereum founders post on Twitter that states that people should not use more than 2x leverage.

Don't use >2x leverage. Just don't.

It is one of the things he listed as a financial advice. As a trader, what do you think about it? We set some money aside for trading and as for me I still use up to 2.5x leverage for bitcoin to open a long position.

I think using this low leverage is good for traders. But investors should not use leverage at all. Investors should even supposed not to leave coins on exchanges but moved the coins to a noncustodial wallet.

This is also not applicable to many coins that are very volatile in a way that 1x leverage can even lead to liquidation of asset. See what happened to TRB recently that fall from almost $700 to $125.

This is part of a list if I'm not mistaken, and based on my understanding this is all tips he gave to people who are looking to invest in the crypto space as newbies. Despite that however I don't think what he's saying couldn't be true for us pros, as even us fall short sometimes especially when it comes to our price predictions and positions.

2x leverage to me is nothing more than a gamble that's stacked against you. moreso if you're an investor since what you're only ever expected to do as one is hold your coins and reap the profits eventually. Having to go so far and greedy to take a 2x leverage is a massive bullet in the head that could literally kill your momentum as a trader and eat all your investments away. Traders can still pretty much survive this as you have said since most of them know what their risks capacities are but I seriously advise against it as well on the account that it kinda is harder for traders to recuperate their momentum and assets especially if you have 2x leverage on all your positions. But who knows? Honestly it all boils down to how much risk you can take as a trader and less about the 2x leverage itself. Personally I think it's a massive risk that you shouldn't take even if the profits look appealing, my opinion could differ to everyone.

[Barikui1]

Actually he is just saying the truth, if you enter a long position in Bitcoin with 100usdt with 2x leverage, it's near impossible for you to get your account liquidated.
If you buy long from 42000 dollars, Bitcoin will have to fall up to five thousand dollars for you to get liquidated, so he is actually right about it.
Me I even prefer to trade futures with higher capital without leverage than do anything leverage trading, in such senario, your duty is to wait for Bitcoin to rise to your desired amount, then cash out big time.

[cute nmp]

Totally agreed .Its very risky for any traders to over leverage when opening positions will be much better to accumulate small profits than go for a huge one and get liquidated easily ,I have lost so much over-leveraging during my days as a new trader  with time i have since learnt my lessons and refrain from such bad trading habits.

[Bitcoin_Arena]

Me I even prefer to trade futures with higher capital without leverage than do anything leverage trading, in such senario, your duty is to wait for Bitcoin to rise to your desired amount, then cash out big time.

Trading “futures” with higher capital without “Leverage”?

How is this possible? or, you probably meant trading spot?
I can't imagine any scenario where one can trade futures contracts minus applying leverage. Even if it's 1x, there is still leverage involved and the position will also have a liquidation price.

[Assface16678]

I think it should depend on the accuracy of the trader in that particular trading position or trade. What the source said is true: don't use 2x the leverage as it will also raise the risk and the amount to be lost if, for instance, if you are not sure about your trade, then don't do it really because it will only burn your trading account. Leverage is a very dangerous thing to manipulate when trading.

So if you are a trader who is sure about the position you will open and confident enough to risk it, then you can raise the leverage for a greater reward or profit, but this is not applicable for those who go short. Yes,  they might earn depending on the volatility of the market, but they can't maximise the potential profit, so it's better to go long when trading bitcoin. There are a lot of things to be learned in crypto trading, and manipulating risk and leverage is one of them.

[JuggSlash]

Vitalik Buterin's advice to avoid using more than 2x leverage in trading is ABSOLUTELY wise.


It helps US to manage risk in the highly volatile cryptocurrency market....

It's crucial to distinguish between traders and investors, with traders using lower leverage for safety....

Asset security in noncustodial wallets is essential. Leverage suitability depends on an asset's volatility, and high leverage can lead to liquidation, as seen with TRB's price drop. Responsible trading involves assessing risk tolerance and market conditions while prioritizing asset security and control...

[boyptc]

I guess there is one point of Vitalik's life that he did more than 2x leverage and he lost and he's done with it. It's a good advise for someone who's conservative in investing but in trading, traders should also consider what he's said.

If someone is going to follow his advise, that's good and it helped what he said. But if not, no matter who's saying these advises, we're on our own as we trade.

Good thing with Vitalik is that, he's got his own platform through his social media and I am sure that many newbies that admires him follows him a lot.

[GreatArkansas]

Well, the leverage thing advice of Vitalik Buterin for me is for sure only applies to him or that is what he is really using.
But for me, it really depends, depends on risk tolerance as other successful traders are using more than 2x leverage, it really depends.
For sure he also have some reason why is and that's how he really trade, where you can say it is less risk.

[tvplus006]

...Don't use >2x leverage. Just don't.

It is one of the things he listed as a financial advice. As a trader, what do you think about it? We set some money aside for trading and as for me I still use up to 2.5x leverage for bitcoin to open a long position...

I have not found information anywhere that Vitalik Buterin is engaged in trading, so I am skeptical of such advice. We know that there are different opinions on this issue, but we can only say for sure that if someone does not know how to trade, then he should not increase his losses using margin.

[Catenaccio]

I am referring to Vitalik Buterin, one of the ethereum founders post on Twitter that states that people should not use more than 2x leverage.

Don't use >2x leverage. Just don't.

Just don't use leverage will give you best.

Bitmex Advanced Margin Trading Guide 2020. Margin enthusiasts will feel more scary after reading the guide. I don't share the guide to hook newbies to margin trading because it is always risky to use leverage, even just 2x leverage like Vitalik advised, just don't.

The guide can help newbies to know why their leveraged positions get liquidated by exchanges and know more about the risk, to avoid leverage.

Because they can understand the formula of liquidation, make calculation and think with 2x leverage, price will not crash to liquidation price but if price falls a bit, one round of liquidation will trigger another and more rounds of liquidations, then eventually price will hit to liquidation price of their open position which in their calculation should be safe. In reality it is not safe in market crash.

[libert19]

I agree with him and it tallies with my experience, when I open positions, I look at liquidation price I'm going to get, and right balance is usually found between 2-4x leverage. I have positions open with leverage in-between same numbers since long time. I tried going above that once (10x with LINK recently) I sensed liquidation price was too close, but I went ahead with it anyway cause FOMO of bull market it didn't turn out well.

Just don't use leverage will give you best.

Bitmex Advanced Margin Trading Guide 2020. Margin enthusiasts will feel more scary after reading the guide. I don't share the guide to hook newbies to margin trading because it is always risky to use leverage, even just 2x leverage like Vitalik advised, just don't.

The guide can help newbies to know why their leveraged positions get liquidated by exchanges and know more about the risk, to avoid leverage.

Because they can understand the formula of liquidation, make calculation and think with 2x leverage, price will not crash to liquidation price but if price falls a bit, one round of liquidation will trigger another and more rounds of liquidations, then eventually price will hit to liquidation price of their open position which in their calculation should be safe. In reality it is not safe in market crash.

I'm of the opinion that margin trading is not bad, it is a good tool reap huge profits in short amount of time in bullish market, even if you are low on capital.

[Natsuu]

Vitalik's saying keep it chill with less than 2x leverage is pretty wise. But, you know, it depends on the crypto because some like TRB can go wild even at 1x. Just gotta be smart about balancing risk and keeping your assets safe.

[tvplus006]

Vitalik's saying keep it chill with less than 2x leverage is pretty wise. But, you know, it depends on the crypto because some like TRB can go wild even at 1x. Just gotta be smart about balancing risk and keeping your assets safe.

No matter what coin you trade, if you do not adhere to the rules of risk management, you will eventually lose your money, even if it is the lowest leverage. Despite the fact that this may be a banal advice that everyone knows about, but nevertheless few people use stop loss in practice, which is mandatory for margin trading.

[BlackBoss_]

Vitalik's saying keep it chill with less than 2x leverage is pretty wise. But, you know, it depends on the crypto because some like TRB can go wild even at 1x. Just gotta be smart about balancing risk and keeping your assets safe.

He tweeted that if you use leverage, don't go with more than 2x leverage but his advice is much stronger, just don't. Don't use leverage is his ultimate advice which I agree with him on this.

Because leverage is very addictive and many times, we can become uncontrolled with it. We can initially limit our leverage taking at only 2x but if things change in the market and with our positions, we might break the plan and change to higher leverages. This will be changes to our nightmare.

No ways we can be sure that we won't break plan so if we can just don't use it initially, it will be better.

[el kaka22]

I always said that we may go with any level of leverage but purely proportional to our risk-reward ratio, which means higher leverage is all that bad neither. Basically by 2x leverage, you are doubling your losses and income depending if you are right or not. I do not think that it would be easy to get liquidated if you do double when you have calculated position according to your available funds, you would probably get out a lot earlier and not really let it be like that. However, at the end of the day, we are talking about a situation that would be understandable, it is not a big deal so it wouldn't be too much of a risk.

I hope that 2x would gain traction too, not that 100x stuff, those are insane people who use it that much, that would mean that if you are wrong even for a slight second, all your money would be gone, that's insane. I agree with 2x, I would be fine with 5x but I wouldn't even approve 10x, even that is being commonly available in most exchanges these days.

[adaseb]

The reason he says this is because there is everyday when there is some liquidation event and you see tons and tons of people blowing up their accounts because they over leveraged.

I doubt anyone actually trades successfully Long term with any leverage greater than 10x. When people use 100x, especially on an alt coin then I wouldn’t be surprised if they didn’t get liquidated sometime in the first few hours. That and your fees are charged with the leverage and taken from your account which isn’t leveraged with fees so your liquidation is actually closer than 1% price moves.

[Fatunad]

I am referring to Vitalik Buterin, one of the ethereum founders post on Twitter that states that people should not use more than 2x leverage.

Don't use >2x leverage. Just don't.

It is one of the things he listed as a financial advice. As a trader, what do you think about it? We set some money aside for trading and as for me I still use up to 2.5x leverage for bitcoin to open a long position.

I think using this low leverage is good for traders. But investors should not use leverage at all. Investors should even supposed not to leave coins on exchanges but moved the coins to a noncustodial wallet.

This is also not applicable to many coins that are very volatile in a way that 1x leverage can even lead to liquidation of asset. See what happened to TRB recently that fall from almost $700 to $125.

When it comes to advises and suggestions then it wont really be that bad that you would really be trying out to hear out on what others been saying specially into those known figures here on this space
then it not bad to take some advises but we know that people are really that having that curiosity and do really loves on experimenting things on which even if  they are aware on whats the risked involved
on which they would really be tending to make use of high leverage instead of less ones or those common suggested because it is really just that normal for people to have that kind of behavior on which
we do really love on seeing huge profits instead of small ones then we are really not that patient when it comes to trading on which there are ones who cant really just that wait
and would really be making use of those huge leverage on which we know that it isnt really that recommended.

There are really just those people do really love to throw up some bucks and there are ones who cant really just able to control their emotions and let their greed
do controls them and ended up miserable because of wrong decisions.

[TookDk]

Leverage is one of the most misunderstood concepts within trading.

Leverage is not important, risk management is important.

It makes no sense to talk about leverage in a context where trade-risk in relation to your account size and position-size is not mentioned.
Once you have calculated those two parameters, then can you evaluate if your leverage is too high.

Leverage is just a tool, nothing more.

[bayu7adi]

If it wasn't Vitalik, would you be discussing this?

He has a lot of money and also he forgets that each person has their own decision to determine which one is the best to choose. 10x leverage is dangerous, but some people like it because they think they will get more money if the market direction matches predictions. 2 years ago I became a person who likes playing with the futures market and high leverage.
I myself admit that I have lost and experienced liquidation in high leverage futures trading on Binance. But I am ready for the risks I will face. Regret is inevitable, but it is my decision, I must be able to make it a valuable lesson.

Right now I only focus on trading on the spot market, which means I only use 1x leverage. However, my action was not because Vitalik was giving advice, but was the result of my experience when experiencing losses on the futures market.

This is also not applicable to many coins that are very volatile in a way that 1x leverage can even lead to liquidation of asset. See what happened to TRB recently that fall from almost $700 to $125.

Can't that only happen if an asset experiences a drastic decline to just $0.00 which can cause the 1x leverage to be liquidated?