Leverage is a powerful tool that can help you maximize your profits when trading on Binance. By using leverage, you can trade with more money than you have in your account, which can give you the potential to make bigger profits.
However, leverage can also magnify your losses, so it is important to use it carefully.
If you are new to trading on Binance, or if you are not familiar with leverage, we recommend that you start with a small amount of leverage and gradually increase it as you become more comfortable with the risks involved.
What is leverage?
Leverage is a feature that allows you to trade with more money than you have in your account. When you use leverage, you are essentially borrowing money from Binance to trade with.
The amount of money that you can borrow depends on the currency pair that you are trading. For example, the maximum leverage for trading BTC/USDT is 3x, which means that you can borrow up to two times the amount of money in your account.
How does leverage work?
To use leverage, you simply need to select the desired leverage ratio when placing an order. For example, if you want to trade with 3x leverage, simply select “3” in the “Leverage” field when placing your order.
Your order will then be executed with 3x leverage.
It is important to note that when you use leverage, your position will be automatically closed (liquidated) if the price moves against you by a certain percentage. This percentage is different for each currency pair and is known as the “margin call” level or “stop out” level.
For example, the margin call level for BTC/USDT is 50%, which means that your position will be liquidated if the price of BTC falls by 50% from the price at which your position was opened.
What are the risks of using leverage?
As mentioned above, one of the risks of using leverage is that your position may be automatically closed (liquidated) if the price moves against you by a certain percentage. This can lead to losses if the market continues to move against your position after it has been liquidated.
Another risk of using leverage is that it can magnify both your profits and your losses. This means that if the market moves in your favor, your profits will be magnified by the amount of leverage that you are using.
However, if the market moves against you, your losses will also be magnified by the amount of leverage that you are using. Therefore, it is important to use caution when utilizing this feature and never trade with more money than you can afford to lose.