The Risk Of Leverage Trading
I have just learnt about this term called ‘Leverage Trading’ when @culgin asked me whether I gained my profit from cryptocurrency trading using this method when I posted an article about how I gathered small profit without taking risk of waiting.
Leverage allows us to increase our potential profit with a small deposit by having the trading provider giving us a loan to allow us to invest in a greater amount with our purchase.
This increases our profit significantly but it will also make us lose more since we are actually investing more based on leverage ratio.
Leverage trading is useful to magnify our profit but we may lose like crazy when the price of the cryptocurrency drops since we are borrowing the money that we do not have to invest actually.
https://www.youtube.com/watch?v=p3xJOZoXJRk Video Source
This is a short-term investment using money we do not have but we may lose more than we can afford.
It is really as good as gambling with high risk.
Leverage trading is using money that we do not have so we may end up losing all the money we have and some may even end in up debt.
https://www.youtube.com/watch?v=mUI4_LzXBg0 Video Source
I am definitely not using this leverage trading.
I manage to gain some nice profit from selling OMG as I had bought it before it was released in Coinbase. After the release, there was a nice increase in its price for me to sell with a profit.
I also sold my Steem to convert into other cryptocurrencies.
At this moment, I am using mainly my profit to invest and trade so if I do lose, I am losing my profit from my earning in crypto trading and my past Steem reward for posting at Steem platform.
It is always wise to invest with what we can afford as well as what we are able to risk losing totally.
Disclaimer: This is my personal reflection and I am not in any position to instruct anyone what they should do. I am not responsible for any action taken as a result of this post. My post can only be a reference for your further research and growth.
