How To Safely Utilize Leverage In Futures Trading Crypto

Leverage can make gains and losses bigger in the volatile world of cryptocurrency trading. Knowing how to use leverage safely when trading crypto futures is essential for managing risk and getting the best returns. This book discusses the basics of leverage managing risk and the best ways to use stop loss orders and position sizing.

As you learn how to trade crypto you should use a trustworthy platform like Ontilt Trading. You can get tools and information to help you deal better if you join Prime XBT today. You can also get a 7% bonus on your deposit when you utilize the promo code PRIMEOTT.  

Understanding Leverage In Futures Trading Crypto

Traders can gain a more prominent position in the market with less capital when they use leverage. When you trade crypto futures leverage is usually given as a number like 51 or 101. This means you can control 5 or 10 worth of cryptocurrency for every dollar you have in cash.

When you use 51 leverage you can trade with 1000 in your account. You can take charge of 5000 situations with this much power. It would be worth 50/5000 x 1 if the price of the coin you're selling increased by 1. You would lose 50 if the price goes down by 1.

Leverage can help you make more money but also raise your risk. If the market goes against you you could lose a lot of money quickly. When you trade cryptocurrencies with 51 leverage you will lose 50 of your starting capital or 500 out of 1000 if the cryptocurrency price goes against you by 10.

It is essential to have a good risk management plan before using leverage in future coin trades. To do this you should use stop loss orders to keep your losses in check and only use leverage with a small amount of your trade cash. To avoid losing money you should always trade with money you can provide to lose and know the risks.

Risk Management Strategies For Futures Trading Crypto

Keeping your risks is essential when buying crypto futures especially when using leverage. Here are some excellent ways to handle risk that will help you get through the volatile crypto markets

• Diversification: Adding different types of investments to your portfolio is an essential way to control risk. If you buy many different cryptocurrencies or types of assets one trade will have less effect on your total stock.

• Position size: When dealing with leverage use the correct position size. A fundamental rule of thumb is to only risk 1 to 2 of your investing cash on a single trade. This helps ensure that a single loss doesn't significantly affect your business.

• Stop Loss Orders: Stop loss orders are significant for controlling risk when buying crypto futures. These orders will sell your stock immediately if the price hits a certain level reducing your losses. Setting stop loss orders at the correct numbers depends on how much risk you are willing to take and your trade plan.

• Use of Leverage: Leverage can help you make more money but also increases the likelihood of losing a lot. Be careful with pressure and only use it when necessary. Do not take on too much debt which can cause huge losses.

• Risk Reward Ratio: Look at the risk reward ratio before you make a move. A good risk reward ratio ensures that the possible benefit outweighs the potential danger. A risk reward ratio of at least 12 is recommended to ensure that your winning trades exceed your lost deals.

  

• Stay Informed: Keep up with news trends and events in the market that could affect cryptocurrencies. You can make better buying choices and handle risk if you stay aware.

• Emotional Control: Feelings can make it hard to think clearly and lead to lousy buying choices. Even when the market is volatile, keeping calm and sticking to your trade plan is essential.

• Continuous Learning: The markets for cryptocurrencies are constantly changing. Learning new things continually and keeping up with the latest strategies and trends can help you better handle risks and adapt to changing market conditions.

Utilizing Stop Loss Orders And Position Sizing

Using stop loss orders and position sizing is essential when dealing with leverage. This is especially true in the risky world of trading crypto futures. Take care of danger and keep your trade cash safe with these tools. To make stop loss orders and position sizing work for you follow these steps.

Stop Loss Orders

Stop loss orders tell the market to sell an investment or cryptocurrency automatically if its price hits a certain amount. They are essential for controlling risk especially when dealing with borrowed money. Here is how to make good use of stop loss orders

• Set Stop Loss at a Reasonable Level: Set a stop loss number based on how willing you are to take risks and how volatile the coin you're buying is. A common rule of thumb is setting the stop loss so that the total loss on a trade doesn't exceed 1 to 2 of your trading capital.

• Adjust your stop loss as the trade progresses: As the cryptocurrency price advances in your favor consider changing your stop loss to lock in winnings and limit risk. This method is called a delayed stop loss.

• Avoid Moving Stop Loss to Avoid Losses: To avoid losing money it may be tempting to move your stop loss. However this can cause you to lose money in the long run. If you don't have a good reason to change your stop loss amount don't.

• Use Mental Stop Loss If Necessary: Some exchanges may not provide stop loss orders. If this happens consider using a mental stop loss. This is when you set a price in your mind at which you will get out of the trade if the market goes against you.

Position Sizing

Position size sets the amount of money you are willing to risk on a single trade. When dealing with leverage you must ensure your amounts are the right size so you don't lose too much. Here is how to figure out the size of your position

• Calculate Position Size Based on Risk: Determine how much money you will risk on a single transaction which should be at most 12  of your overall trading capital.

• Take Leverage into Account: When determining the size of your stock you should consider the leverage you are using. If you trade with 10x leverage for instance you can handle a stock size that is ten times bigger than your trading capital.

• Consider the Volatility of the Cryptocurrency: For cryptocurrencies whose prices change a lot it may be necessary to hold smaller amounts at a time.

• Adjust Position Size Based on Stop Loss Level: You should change your trade size based on your stop loss level. If the stop loss is tighter the position size may be bigger but if it is broader it may need to be smaller.

Safe Trading Practices With Ontilt Trading

Leverage can help you make more money when trading crypto futures but it also comes with many risks. At Ontilt Trading we care about our traders' safety and success more than anything else. By using good risk management techniques like stop loss orders and position sizing traders can lower their risks and make smart choices. 

Remember that when trading with our affiliate broker Prime XBT everyone who uses the promo code PRIMEOTT receives a 7% bonus on their deposit. Start trading with Ontilt Trading today and feel safe in the exciting world of cryptocurrency futures.