Trading Leverage

[Huppercase]

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?

You see the way leverage can help you in life, the same way trading can help you maximize profits but then you have you to do it in a coded way that it wouldn't back fire. In real life, if you want to leverage I'm not sure if you would do more than your capacity. For instance borrow funds to gamble because you think you can win, take a huge loan to finance a new business that you aren't too experience in, all this can go sour. The same logic goes with trading when you trade with over leverage position because you want to make quick money.

Leverage trading is like gambling, there are people that are making from the gambling and we have more people losing, it's the same logical way leverage trading does but the exchanges are not the ones making the money. If you lose in leverage, there is another trader that has made money from your losses. What the exchange get is the trading fees and nothing more. As long as the demand keeps coming from traders, they will continue to offer the services seamlessly.

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[Etranger]

Leverage trading is like gambling, there are people that are making from the gambling and we have more people losing, it's the same logical way leverage trading does but the exchanges are not the ones making the money.

I would not compare leverage trading with gambling. In my opinion, gambling is more tied to luck and chance, while trading is a more rational, calculated activity. Leverage increases risks, no doubt, but the essence of trading remains the same. If a person trades carefully and prudently, then he will do this, with or without leverage.

[darkangel11]

The higher the leverage the more you're crossing into gambling territory.
2x - 5x is doable if you're really into this and want to make some money fast, or lose it fast. People who use 20x and more are just gambling because there's no way they can predict if in the next hour the price will be 1% higher or lower and when a very small move can liquidate you you're not relying on indicators, but rather on luck. Why would you risk everything if you can hold your 1x or 2x position for another month and make money anyway, because bitcoin is trending up in the bull market so it's going to attack higher prices eventually. Don't be hasty or you'll lose.

[Huppercase]

I would not compare leverage trading with gambling. In my opinion, gambling is more tied to luck and chance, while trading is a more rational, calculated activity. Leverage increases risks, no doubt, but the essence of trading remains the same. If a person trades carefully and prudently, then he will do this, with or without leverage.

Gambling and leverage has some similarities to some extent. Whatever decision you make in gambling, the outcome is not on what you expect it to happen, the entire outcome depend on what happen in the field(for sport bets) and if you do the comparism with leverage trading, when you place your position either long or short, you don't have the final say on what will happen later, it's the market move that will decide. So playing this kind of risky games means you are hoping it happen in your favour which is pure gambling.

Spot trading is different from leverage trading, the risk control in spot trading is far less than leverage trading depending on your leverage size, the money you are dying hard to make, if you are patient enough you can make it spot trading. It's all about been patient and buying at the right time. If anyone has bought some chunk of Bitcoin at $20k with good amount, I see no reason why someone will be fighting to long/short market at every opportunity.

[Viscore]

Leverage trading is like gambling, there are people that are making from the gambling and we have more people losing, it's the same logical way leverage trading does but the exchanges are not the ones making the money.

I would not compare leverage trading with gambling. In my opinion, gambling is more tied to luck and chance, while trading is a more rational, calculated activity. Leverage increases risks, no doubt, but the essence of trading remains the same. If a person trades carefully and prudently, then he will do this, with or without leverage.

While leverage makes trading riskier, but we all know that if you’re skilled on it, you will also gain higher chances of making a larger income, something that gambling can’t guarantee. So I also won’t agree that using leverage into trading falls into gambling, except if you are trading from a gambler’s point of view. With that, you will definitely end up with huge losses, no doubt.

[tvplus006]

...it is helpful for those that can take advantage of the feature but might be a disaster for people that are greedy only thinking about profit they gonna get not thinking about the loss they might endure due to irresponsible use of the leverage feature.

No matter how corny it may sound, but if risk management is not followed, then you will lose your money anyway. And it should be understood that if someone risks the entire deposit in the hope of getting a big profit, if the price moves in the opposite direction to his expectations, his position will be liquidated by the exchange.

[khiholangkang]

Leverage trading is like gambling, there are people that are making from the gambling and we have more people losing, it's the same logical way leverage trading does but the exchanges are not the ones making the money.

I would not compare leverage trading with gambling. In my opinion, gambling is more tied to luck and chance, while trading is a more rational, calculated activity. Leverage increases risks, no doubt, but the essence of trading remains the same. If a person trades carefully and prudently, then he will do this, with or without leverage.

In this case it is necessary to look at many elements, because looking at leverage is like a multiplier how it works, it is true that we can see and do research efforts with mathematical systematic analysis of the market, but in practice there is an element of gambling, secondly the most catalytic in my opinion here because trading that has leverage is trading using derivative products from the original asset just like forex products in forex, This I conclude that there is no buying and selling activity on the original goods or the original coin, it's like you put your money and choose your multiplier then you will predict where the market will move, more or less that's how it works and there are many elements of this included in gambling indirectly.

[South Park]

...it is helpful for those that can take advantage of the feature but might be a disaster for people that are greedy only thinking about profit they gonna get not thinking about the loss they might endure due to irresponsible use of the leverage feature.

No matter how corny it may sound, but if risk management is not followed, then you will lose your money anyway. And it should be understood that if someone risks the entire deposit in the hope of getting a big profit, if the price moves in the opposite direction to his expectations, his position will be liquidated by the exchange.

Risk management is often ignored by most traders as they do not think that is where money is made, for them studying the ways of opening a position at the bottom and closing it at the top is where the money really is, so they do not want to waste their time in a skill that seems geared towards protecting their capital instead of gaining it, a big mistake without a doubt, but one most traders do not realize they are making until the markets move against them and their capital gets decimated.

[_BlackStar]

-snip-

Risk management is often ignored by most traders as they do not think that is where money is made, for them studying the ways of opening a position at the bottom and closing it at the top is where the money really is, so they do not want to waste their time in a skill that seems geared towards protecting their capital instead of gaining it, a big mistake without a doubt, but one most traders do not realize they are making until the markets move against them and their capital gets decimated.

Loss and profit are parts of trading that cannot be separated - but when traders have risk management, they can minimize losses by prioritizing strategy over ambition. Greed is often the reason why traders have to accept unwanted losses - they can even fall into the same hole when they don't learn from previous mistakes. High leverage is a trap - don't play around, it will give the trader a high chance of losing all his money.

Risk management is the most important thing in investing and trading - but regarding future trading, risk management may be more difficult because many traders are too eager to get high leverage to get multiple profit. I don't know - I don't like trading futures, it has a high risk of losing all the money compared with spot trading and investing.

[freedomgo]

Leverage trading is like gambling, there are people that are making from the gambling and we have more people losing, it's the same logical way leverage trading does but the exchanges are not the ones making the money.

I would not compare leverage trading with gambling. In my opinion, gambling is more tied to luck and chance, while trading is a more rational, calculated activity. Leverage increases risks, no doubt, but the essence of trading remains the same. If a person trades carefully and prudently, then he will do this, with or without leverage.

Leverage will fall into gambling if you don’t know actually how to trade using leverage, but if you are an expert in trading using leverage, then one should not worry about it. In fact, it will even increase your potential profits and achieve faster your goal in trading, but for some newbies who are still starting to trade, using leverage should always be discouraged as the risk to lose is high and it can instantly vanish all your funds in just a very short time.

[shinratensei_]

Risk management is often ignored by most traders as they do not think that is where money is made, for them studying the ways of opening a position at the bottom and closing it at the top is where the money really is, so they do not want to waste their time in a skill that seems geared towards protecting their capital instead of gaining it, a big mistake without a doubt, but one most traders do not realize they are making until the markets move against them and their capital gets decimated.

there's always reason why big fund management out there always priorities risk management, whatever asset they tried to add to their portfolio these big fund management seems to really focused on how to keep the money from losing while also gaining profit which definitely gonna be ignored by most of the investor and trader out there.

when our money is just too low in term of capital just pursuing profit maybe does make sense, it only doesn't make sense when our capital has grown big enough that we actually need to start thinking about how to manage the risk, we already get the advantage of having big capital at that point so profit is not a problem anymore but how can we make our capital remains the same if not growing thats what should be of concern.

leverage is okay, if we only use 5%-ish from our overall capital, it might opens a way to further faster the profit generation but it always comes at risk, as far as I know, trading with leverage, add so much risk to our portfolio if not managed properly just as you stated too bad many people ignore this kind of thing.

[adaseb]

Why do exchanges offer them? Because they get more in trading fees.

If someone has $100 and the exchange fee is 0.1% the exchange gets $0.10 for a trade. Since they need to exit the trade, eventually it’ll be another $0.10 bring the total to $0.20

But if they offer 100x leverage, instead of $0.20 in fees, they will get $20 in fees. They don’t care if the user makes money or not, as long as they get paid for their fees.

[Barikui1]

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?

This your question somehow sounds ridiculous because you as a person should have known that the exchange you are using to trade don't give a f**k if you are losing or not, what is more of a concern to them, is how much they can make, so the leverage will always be there, and mind you, leverage is not a bad thing in trading, if it's been used properly.

Me as a person, when am trading, I don't use more than 3x leverage you know why? Because over leverage is the easiest way to get liquidated, but if you are knowledgeable enough in the craft, you will definitely not abuse the the privilege of having access to leverage, because in as much as it is been used to double up our margin, it can also be a trape, if you don't know how to use it properly.

[Lakai01]

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?

This your question somehow sounds ridiculous because you as a person should have known that the exchange you are using to trade don't give a f**k if you are losing or not, what is more of a concern to them, is how much they can make, so the leverage will always be there, and mind you, leverage is not a bad thing in trading, if it's been used properly.

Yes and no. Exchanges are not entirely innocent here ... You have to look at where leverage trading actually comes from. Leverage is used as standard in forex trading (EUR vs. USD, ...) because the price movements there are so small that without leverage you would have to bet incredibly large sums to be able to make any noticeable profits at all.

The fact that leverage is now also offered in a market that moves significantly on all time frames (low and high) is neither necessary nor, in my opinion, sensible at all. It simply looks to me like exchanges are using this to take money out of customers' pockets even faster.

On the other hand, customers are of course entirely to blame if they use leverage and lose money.

[Fara Chan]

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 think it is still quite normal for the exchange to still make its offer with something because leverage itself is a form of great control that is had in a trade so in trading this can always happen even though some people consider it to be a bad deal. Because anyone can see that if someone is able to control the market, it will definitely be easy to achieve profits even though it is not determined by when the time comes. And when the exchange offers it to many traders, it will also be more profitable for the exchange in terms of any fees received from traders with an amount that may be quite hefty.

[skarais]

~~~

I think it is still quite normal for the exchange to still make its offer with something because leverage itself is a form of great control that is had in a trade so in trading this can always happen even though some people consider it to be a bad deal. Because anyone can see that if someone is able to control the market, it will definitely be easy to achieve profits even though it is not determined by when the time comes. And when the exchange offers it to many traders, it will also be more profitable for the exchange in terms of any fees received from traders with an amount that may be quite hefty.

In futures trading, leverage is needed to double profits for a trader. The lower the leverage, the lower the risk borne by a trader, while the higher the leverage, the higher the risk of losing money when prices fluctuate.

Futures trading is never suitable for those who rely solely on luck, but futures trading is for those who are truly able to analyze the market and are skilled enough in risk and emotional management. Futures trading is tempting because of the possible returns, but carries a high risk of losing money if it is not supported by a strategy and starts with greed.

[Pandu Geddon]

~~~

I think it is still quite normal for the exchange to still make its offer with something because leverage itself is a form of great control that is had in a trade so in trading this can always happen even though some people consider it to be a bad deal. Because anyone can see that if someone is able to control the market, it will definitely be easy to achieve profits even though it is not determined by when the time comes. And when the exchange offers it to many traders, it will also be more profitable for the exchange in terms of any fees received from traders with an amount that may be quite hefty.

In futures trading, leverage is needed to double profits for a trader. The lower the leverage, the lower the risk borne by a trader, while the higher the leverage, the higher the risk of losing money when prices fluctuate.

Futures trading is never suitable for those who rely solely on luck, but futures trading is for those who are truly able to analyze the market and are skilled enough in risk and emotional management. Futures trading is tempting because of the possible returns, but carries a high risk of losing money if it is not supported by a strategy and starts with greed.

however, futures trading is very popular with traders, especially new traders. for some reason, their interest is in futures trading rather than spot trading. I don't have that data, but from the few people who come to me, there are more of them who are interested in trading with Leverage. they consciously know the risks are higher but they think their chances are also high.
Perhaps because of the large amount of interest that exists, that is what prompted the exchange to be very serious about developing and offering futures trading. they make huge profits from futures trading.

[skarais]

~~~

however, futures trading is very popular with traders, especially new traders. for some reason, their interest is in futures trading rather than spot trading. I don't have that data, but from the few people who come to me, there are more of them who are interested in trading with Leverage. they consciously know the risks are higher but they think their chances are also high.
Perhaps because of the large amount of interest that exists, that is what prompted the exchange to be very serious about developing and offering futures trading. they make huge profits from futures trading.

Of course, you can't draw conclusions from just one or two people who come to you and show interest in futures trading. So far, 10/10 people who come to me are those who are interested in spot trading as well as investing, but just as I said, I can't make the right conclusion that spot trading is more interesting than futures trading.

The logical reason why futures trading attracts so many beginners is its profit potential. But unfortunately, beginners focus too much on profits while many of them ignore the high risk of loss. It might still be fine if they learn from a mentor, but things will be bad if they come with all their budget and make big mistakes because they are interested in other traders' profits.

[EarnOnVictor]

Leverage trading is like gambling, there are people that are making from the gambling and we have more people losing, it's the same logical way leverage trading does but the exchanges are not the ones making the money.

I would not compare leverage trading with gambling. In my opinion, gambling is more tied to luck and chance, while trading is a more rational, calculated activity. Leverage increases risks, no doubt, but the essence of trading remains the same. If a person trades carefully and prudently, then he will do this, with or without leverage.

You are wise this way and there is nothing reasonable to compare there still, as leverage (trading) and gambling are not just the same thing. In gambling, you may increase the risk of your bets, and the same is true in trading, you may increase the risk of your trading, that's the only sense they correlate here, it is all about your risk affinity only. But for the operation itself (trading and gambling), they are just different in every aspect because if you are trading, you are actually engaging in a business, it now depends on how good you are with the business since it is a very risky business.

But for gambling, you are not engaging in any business but a form of betting which will not be able to sustain you no matter how good you are, or how good you believe you are in doing it. From a point of view, I've seen enough traders on the street, they are tactical and consistent about it. And if you check social media today, you see lots of them that rely on it alone and are big boys openly who started with a small amount. Can you tell of gambling the same way? Certainly No. This is a little hint that they are not just the same thing. And if you know how to play with your leverage very well, you get more earnings in trading through it, but it becomes an issue if you are gambling on the high leverage when you are not a good trader.

[redsun114]

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.

Oh I see but 1x leverage still seems to be small and may not something to worry about about. If it's only about earning a quick profit, trading without using leverage is possible but they can use leverage in order to enhance those minimal profits that they can get.

I wouldn't say it's an addiction but this is only normal in trading because price volatility is always there but it can be called as greediness once a trader uses more leverage and capital to trade. It is risky even if we say they are skilful and losing is also normal even on a regular trade because once they lose it, it can badly affect them not only financially but also mentally, physically, etc...