Leverage in Crypto: Not A Tool To Be Avoided

Leverage is not the problem. Your position size is. Let me explain.

You have a $1,000 account. Your risk per trade is 1%. That means every trade that you lose should only lose you 1% of your account. i.e. $10 per loss. I could end it here. Because this is all that matters.

It doesn't matter if you're on 100x lev or 5x. As long as you're only losing ~$10 per losing trade, you're gucci. If the stop loss on your trade is 1% away from entry... Your margin will be: $1,000 on spot (1% of $1,000 = $10) $100 on 10x leverage (1% = 10% on 10x lev = $10)

Leverage is not a tool for you to take on irresponsible amounts of risk. It's a tool meant to give you - the trader - the ability to commit less of your capital into any single trade, so that you can open multiple positions at once with the same amount of risk and capital.

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