Why Leverage In Trading Doesn't Matter (Risk Management)

Risk management is the most important practice when it comes to trading bitcoin, trading ethereum, or trading alt coins. I explain the difference between leverage and margin and why your position size is what matters in the end.

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[deegaming]

I trade a 1000:1 leverage, yet my stop loss distance is always equal to 1% of my account size, because I calculate my position size. So leverage is only there to allow me to open micro lot positions on a small account. If my leverage was too low, my broker would physically not allow me to open any trades.

[alex]

So if i understand correctly, the impact of this is less room for the trade to go against you?

[bigsloot]

I still can’t make sense of this. If I have a $25k account at 1x leverage that i want to make $1k with, my position size would ultimately have to be bigger than if I was using 1:100 leverage if I want to risk the same amount, i don’t care that my SL stops me before my account literally blows, I only want to risk 2% and thats vastly different between 25k and 2.5m… im just confused not trying to say anyone’s wrong

[andriyaniliev]

Thank you!
Let's say you have 100$ and you use leverage 10 and you risk 1% to gain 2% so I risk 10$ to make 20$ and let's say I go long and the price goes in my direction by 2% that means I gain 20 $ because of leverage 10 that I use. In Binance for example if we exclude bitcoin and maybe ethereum most altcoins can be traded with a maximum of 50 leverage and if I want to enter with only 10$ because for example that is my strategy, I will have to make 4% to make 20$ dollars profit. It might be a good option to enter with 20$ with a leverage of 50 and set a stop loss at -50%. It depends on the trader himself and his strategy. Sorry for the english. I used google translate.

[begcoins]

Ive just been teaching my group this. They are shocked when they see 100x.