How to trade with leverage on BingX

Leverage trading on BingX allows traders to amplify their profits and losses, but prudent risk management is crucial to navigate the inherent risks.

Nov 28, 2024 at 02:35 pm

Step 1: Understanding Leverage Trading

Leverage trading is a technique employed in trading that amplifies the potential profit or loss by utilizing borrowed funds. It essentially allows traders to control a larger trading volume with a smaller initial investment. Platforms like BingX offer leverage on various trading instruments, primarily for perpetual futures contracts. The mechanism works by providing traders with the option to leverage their capital by a certain factor, which can range from 1x to 100x. It's worth noting that while leverage trading can multiply profits, it also exacerbates losses. Prudent risk management and a thorough understanding of the risks are crucial before engaging in leverage trading.

Step 2: Access to Leverage Trading on BingX

BingX features a user-friendly interface that simplifies the process of enabling leverage trading for perpetual futures. Traders can follow these steps to activate it:
a. Log in to your BingX account.
b. Select the "Futures" tab from the top navigation bar.
c. Choose the desired trading pair, such as BTC/USDT or ETH/USDT.
d. Click on the "Trade" button associated with the chosen pair.
e. The trading interface will display various settings, including the "Leverage" option.
f. Select the desired leverage amount based on your risk tolerance and trading strategy.
g. Once the leverage is set, traders can proceed to place their orders.

Step 3: Executing Leveraged Trades

Placing a leveraged trade on BingX is similar to regular futures trading, with the primary distinction being the leverage factor applied. Traders can follow these steps to execute a leveraged trade:
a. After setting up the desired leverage, click on the "Buy/Long" or "Sell/Short" button to enter the desired position.
b. Input the quantity of the contract you want to buy or sell in the "Amount" field.
c. Click on the "Place Order" button to execute the trade.

Step 4: Monitoring and Managing Leverage Positions

Active monitoring of leverage positions is essential for effective risk management. BingX provides real-time updates on the status of open positions. Traders should constantly observe the following key elements:
a. Position Margin: This reflects the amount of funds allocated as margin for the leveraged position.
b. Unrealized P/L: This shows the current profit or loss, realized on paper, for the open leveraged position marked against the entry price.
c. Maintenance Margin Ratio: This ratio indicates the minimum margin required to maintain the leveraged position open. It is expressed as a percentage. Traders should ensure that this ratio does not fall below the maintenance margin level to avoid liquidation.

Step 5: Closing Leverage Positions

Closing a leveraged position involves exiting the trade. Traders can do this by placing an order in the opposite direction of the initial position. For example, if you have a long position, you would close it by placing a sell order of the same quantity. Once the closing order is executed, the leveraged position will be closed, and any profit or loss will be realized. It is essential to remember that leverage trading amplifies both profits and losses, and traders should close positions promptly to limit potential losses.