Trading Leverage

[alastantiger]

In life, leverage is good as it helps to help us accomplish a goal faster. But in trading, leverage in trading is clearly a bad deal. It messes things up for both the traders and the market. So my question is why do exchanges still offer them. They keep pushing it to traders like favourite snack?

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[Oshosondy]

If you have $100 and the exchange has trading fee of 0.05%. In each position you open with 1x leverage with the $100, that is $0.05 as the trading fee of the position you opened.

If you have $100 and use 10x leverage. The trading fee will go 10 times higher. The trading fee is $0.5.

If you go 100x. The trading fee is $5.

Exchanges make money as the leverage increases. The exchanges do not care if you lose or not, what the exchanges care about is the profit they want to make.

[Assface16678]

If you are not experienced in trading, then dont mess with the leverage. Yes, leverage is increasing the potential profit you can have in your trade, but also the risk. If you mess up with leverage, even a slight down trade in your trade might cause your account to be liquidated. Even experienced and expert traders don't use much leverage because they know how dangerous it is and they know that leverage is not the solution for everything or easy money. Remember, in trading, if you take a shortcut and rush things, then expect that you might stumble once, and it will keep on repeating until you learn your lesson. I've tried using leverage, and of course it didn't go well. That's why, from that experience, I never use it again. That feature will never be gone because trading platforms know how greedy a trader is sometimes, and it will benefit them and also the narket.

[EL MOHA]

In life, leverage is good as it helps to help us accomplish a goal faster. But in trading, leverage in trading is clearly a bad deal. It messes things up for both the traders and the market. So my question is why do exchanges still offer them. They keep pushing it to traders like favourite snack?

Because exchanges are business platforms and what they are interested in is profit. Leverages are like lended funds to trade yes it is a bit risky but it’s also brings about more profit on a single trade than the one without leverages same as the lose but traders prefer to take the risk of using leverages just to maximize their profits. Any exchange that stops leverage trading now will lose almost all its traders as a customers because it is why many traders are after, in fact most exchanges lure in more traders with their high leverages. So as long trading exits I don’t see leverage been removed

[South Park]

In life, leverage is good as it helps to help us accomplish a goal faster. But in trading, leverage in trading is clearly a bad deal. It messes things up for both the traders and the market. So my question is why do exchanges still offer them. They keep pushing it to traders like favourite snack?

Exchanges earn money by the fees they charge you and the number of people they can bring to their platform, if a person had 1k dollars and they thought this was an amount too low to trade the markets and make a lot of money with it, a thing they will be right about, exchanges do what they can to convince that person to become a trader anyway and use a very high level of leverage, so the person gets convinced about it and becomes a trader, earning additional profits to exchanges they may not have gotten otherwise, so it is clear why exchanges push leverage to their clients, even those that have a reasonable amount of money on their accounts.

[Bitcoin_Arena]

In life, leverage is good as it helps to help us accomplish a goal faster. But in trading, leverage in trading is clearly a bad deal.

The other trader who made massive profits on the otherside would disagree. It's not a bad deal to them. What is a bad deal is your poor trading decision. The money makes it's way to the smart traders from those who made poor decisions. That's how markets work.

The exchanges mostly benefit from the trading fees from all traders using their platform.

[tvplus006]

...So my question is why do exchanges still offer them. They keep pushing it to traders like favourite snack?

The answer is simple: the exchange offers leverage, as there is a demand for this type of trading. And despite the high risks of using leverage, this type of trading is very popular among traders and if you adhere to the rules of risk management, it becomes less risky.

[mk4]

So my question is why do exchanges still offer them. They keep pushing it to traders like favourite snack?

Because demand is high. That's simply just it.

As for leverage being bad, it is bad if you don't know what you're doing — which 95%+ of people really don't, just like trading in general. Could be a great tool if you truly know how to trade(hedging purposes and such).

[hd49728]

In life, leverage is good as it helps to help us accomplish a goal faster. But in trading, leverage in trading is clearly a bad deal. It messes things up for both the traders and the market.

Leverages are roots of bad and worst things. When society, economy and market are good, you will feel leverages are like magic tools for you to get rich quick. It's time when you become more easily to forget about risk and lessen your principles on risk and capital management and how to use leverage to avoid risk and liquidation. It's time when things become worse and you even don't aware of such slowly changes.

When all things from society, economy to market become bad enough, you will see leverage is like toxic pill for you.

So my question is why do exchanges still offer them. They keep pushing it to traders like favourite snack?

They get benefit from it. Losers is their customers, traders, not exchanges so exchanges have no reason to stop providing leverages, futures trading to customers.

[livingfree]

In life, leverage is good as it helps to help us accomplish a goal faster. But in trading, leverage in trading is clearly a bad deal. It messes things up for both the traders and the market.

Anyone can try leverage but how long you're going to do it? It's advisable that don't do it seriously when you are not even experienced and can't take that much risk.

Stay on the spot and be good with it.

So my question is why do exchanges still offer them. They keep pushing it to traders like favourite snack?

They're not pushing it as it's not mandatory. It's part of their services offered to every trader as each trader doesn't have the same risk ratio and appetite.

[sheenshane]

So my question is why do exchanges still offer them. They keep pushing it to traders like favourite snack?

Because demand is high. That's simply just it.

Exactly and I tend to agree.

These should be the main reasons.

• Profitability, it's all about money.
• Increase trading volume, when the demand is high.
• Attract more traders which means for them more profit.

Traders trying to have a minimal risk on leverage trading by using stop-loss might still be hoping that they can manage the risk in this kind of trading.  As they said, a high risk means possible high profit.

[EarnOnVictor]

In life, leverage is good as it helps to help us accomplish a goal faster. But in trading, leverage in trading is clearly a bad deal. It messes things up for both the traders and the market. So my question is why do exchanges still offer them. They keep pushing it to traders like favourite snack?

I disagree with you that leverage is bad, it is good, but use the leverage wisely. One of the advantages of leverage is that you do not need to have a big amount of money before you have the power to take certain risks. It would have been so discouraging to some people if they did not have access to leverage.

The leverage calculation is even very convenient in crypto trading where exchanges make it flexible for us. If it were to be the traditional brokerage arrangement, it would be worse. Imagine, you need to have at least $10,000 before you can place a single trade with x1 in Forex by using a lot size of 0.1 if you use the leverage of 1:1. This was, unfortunately, the least lot size one could trade when I started Forex trading then. Now tell me, how many people can have that kind of money to trade with?

Leverage helps us reduce margin and open more risk, it is we who should be mindful of the risk we take and focus/prioritise on our money and risk management. The issue with people using leverage is not leverage itself but overleveraging by using all the risk associated with the particular leverage they choose. This isn't good. Now, how is that the fault of the leverage itself or the dealing house offering it? No one forces us, my friend.

[hugeblack]

Most traders have a background in Forex and regular trading markets, in which Leverage is used due to slow price movements. Therefore, traders often start with 1x leverage, and soon it turns into an addiction to reach a quick profit, so we see 10x leverage or more, which often leads in the end to losing your money.

[Oshosondy]

In life, leverage is good as it helps to help us accomplish a goal faster. But in trading, leverage in trading is clearly a bad deal.

The other trader who made massive profits on the otherside would disagree. It's not a bad deal to them. What is a bad deal is your poor trading decision. The money makes it's way to the smart traders from those who made poor decisions. That's how markets work.

But did you know that people that is making money from trading are the patient people. They have high amount of money and they are going 1x leverage or less than 1x leverage. I think what he meant is that leverage is bad because it draws the liquidation price closer to the market price but as the leverage increase, the exchanges are making more money.

[poodle63]

leverage still being offered by many exchange or trading platform because people like it, they can make quick buck out of it from the slightest price movement ever, aside from the fact that exchange also make money from it.
but so far I've seen so many trader using leverage feature with lower capital to use, I guess it works like safe keeping their money form being used entirely just for one trading activities I find it rather quite effective, just leveraging 25x 3% of your money if worst come to worst you only lose 3% of your entire money but spot trading with entire capital if market take a hits your entire capital take a hits too even though its not lost 100%.
at the end of the day, both have their own advantages, avid trader that trades daily usually uses leverage far more frequently than the other people I presume.
so yes it might be dangerous but it has its place among those people that likes volatility and like to speculate, just remember though high leverage only gonna work for people that knows how the market acts.

[Finestream]

In life, leverage is good as it helps to help us accomplish a goal faster. But in trading, leverage in trading is clearly a bad deal.

The other trader who made massive profits on the otherside would disagree. It's not a bad deal to them. What is a bad deal is your poor trading decision. The money makes it's way to the smart traders from those who made poor decisions. That's how markets work.

The exchanges mostly benefit from the trading fees from all traders using their platform.

Well, you could use leverage as your advantage if you are actually a good and reliable trader. That’s where you can maximize your profits and earn consistently. However, leverage is never good for those who are still starting to learn the process in trading. They should only trade with a minimal amount, something that they can afford to lose. Traders should know when to use leverage in trading, and when not to, in order to control the risks in trading and lessen their losses in trading.

[boyptc]

So my question is why do exchanges still offer them. They keep pushing it to traders like favourite snack?

I am not trading in other markets but there's a likely that it's also an inspiration from those just as what HB has explained. They're not pushing traders to stick with the leverage, it's all about our freewill when we trade.

Those that have background on it will definitely find for it. But this isn't for everyone, I've read countless failure stories about how they've increased their leverage and just a few hours away when they're not able to monitor it, they've been liquidated.

That's the risk and everyone except the newbies aren't aware of how volatile this market is. But the rest, you can count on them that they know what they're doing.

[Sanitough]

In life, leverage is good as it helps to help us accomplish a goal faster. But in trading, leverage in trading is clearly a bad deal. It messes things up for both the traders and the market. So my question is why do exchanges still offer them. They keep pushing it to traders like favourite snack?

Exchanges are running a business, so it’s normal for them to offer leverage trading so they can also gain profits out from those leverage trading transaction costs. And while these traders are mostly greedy, most particularly those beginner traders, they eventually grab those ideas so they can start maximizing their profits at a short term duration. Not realizing that using leverage in trading gets even more risky, most especially if you are still not inclined in that form of trading.

[famososMuertos]

It is one of the great things about leverage, they are the steroids of investments, then, losing in leverage is normal, but profits come, as long as you have correct management of your finances, and talent.

Consequently, the business for the exchanges is to have the product, since they are highly desired, and they are "approved" by the "FDA" /that is, by steroid mentions, then it would be the equivalence.    

If you don't have that, just buy and sell.  

[Maslate]

So my question is why do exchanges still offer them. They keep pushing it to traders like favourite snack?

Because demand is high. That's simply just it.

As for leverage being bad, it is bad if you don't know what you're doing — which 95%+ of people really don't, just like trading in general. Could be a great tool if you truly know how to trade(hedging purposes and such).

Exactly. While the demand is high, exchanges will definitely take advantage on it, simply because they will also benefit from its profits. And as long as it will put profits on them, regardless if the traders end up losing, they will continue to encourage traders to use leverage in trading.

I guess I don’t see leverage as a bad thing, because it actually enhances the potential to make higher profits. But for a newbie’s point of view, it’s certainly not advisable for him because of lack of skills and experience in the market.