My Margin Trading Cheat Sheet

[CryptoTroubleshooter]

Margin trading means trading on borrowed money. The higher the leverage, the closer I am to making a lot of money, and to losing everything.

The lender will liquidate my position if Bitcoin falls by the percentages below.

My cheat sheet:
At 2x leverage, I’m liquidated before price drops 50%.
At 5x leverage, I’m liquidated before price drops 20%.
At 10x leverage, I’m liquidated before price drops 10%.
At 50x leverage, I’m liquidated before price drops 2%.
At 100x leverage, I’m liquidated before price drops 1%.
At 400x leverage, I’m liquidated before price drops 0.25%.
At 500x leverage, I’m liquidated before price drops 0.20%.

Interest and other charges begin draining my position immediately, and maintenance margin requirements will kill the trade before my balance hits zero. Slippage can leave me owing money to the lender after losing everything.

[Oshosondy]

You are talking about margin trading or derivative trading?

I asked because I have only seen 10x before on margin trading account on all the exchanges that i have been using. 3x for isolated and 10x for cross margin.

But I have seen up to 125x, 200x and up to 500x for bitcoin on derivatives before.

The use of high leverage shows how many traders are gamblers.

[CryptoTroubleshooter]

Hi there!

The same liquidation math applies to spot margin and derivatives because both involve borrowed money.

Like you mentioned, spot margin leverage is capped much lower than derivatives... but leverage is leverage regardless of the product name.

[goldkingcoiner]

leveraging and other forms of derivatives trading is pure gambling and you will 100% lose ALL your money sooner or later. Avoid it like the plague. I have been telling newbie traders this for years but they still insist on trying and failing for themselves. Even at 1.1x leverage you can (and will) lose all your money.

You know what is the same as 1x leverage trading and will not get you liquidated, no matter how much % the price goes down? Spot trading. So even if a trade goes bad by 70% you will still have the same amount of coins as you did before. All you have to do is wait for the price to go back up.

[CryptoTroubleshooter]

Your 1.1x leverage example is relevant.

Over time, interest and other charges will raise that to 2x and beyond, even if Bitcoin price is unchanged.

[JeffBrad12]

Should note that if you use cross margin account it will be different, liquidation will happen only when you are running out of margin in your account and that cheatsheet above only relevant if you are opening trade in an isolated margin account. You could be opening a 2x leveraged position but not getting liquidated even when the price dropped 50% because you have margin to maintain it in your cross margin account.