How to trade with leverage on DigiFinex

Leveraged trading amplifies both profits and losses, making it a high-risk, high-reward strategy that requires traders to understand the inherent risks before engaging in such trading.

Nov 27, 2024 at 03:46 am

How to Trade with Leverage on DigiFinex

Leverage trading amplifies both profits and losses, making it a high-risk, high-reward strategy. Understanding the risks involved is essential before engaging in leveraged trading.

Step 1: Understand the Risks of Leveraged Trading

• Increased Volatility: Leverage magnifies price fluctuations, amplifying potential losses during market downturns.
• Margin Calls: Lenders may demand additional collateral if your account balance falls below a certain level. If you cannot meet the margin call, your positions may be liquidated at a loss.
• Emotional Trading: Leverage can induce overtrading and irrational decisions when traders are chasing potential profits. Avoid emotional trading and trade based on a well-defined strategy.

Step 2: Choose a Leverage Ratio

Different exchanges offer varying leverage ratios. DigiFinex provides leverage of up to 10x, depending on the asset and trading pair. Choose a leverage ratio appropriate for your risk tolerance and trading experience. Higher leverage ratios increase potential profits but also magnify risks.

Step 3: Fund Your Account

Before trading with leverage, ensure you have sufficient funds in your DigiFinex trading account. The amount required will depend on the leverage ratio you choose and the value of the position you open.

Step 4: Select a Trading Pair

DigiFinex offers a wide range of trading pairs. Choose the trading pair you wish to trade with leverage, considering its volatility and liquidity. Remember, higher volatility pairs offer greater potential rewards but also higher risks.

Step 5: Open a Leveraged Position

On the DigiFinex trading interface, select the trading pair and leverage ratio. Choose whether you want to open a long or short position (buying or selling the base asset). Specify the entry point, stop-loss, and take-profit orders as desired.

Step 6: Track Your Position and Manage Risk

Once your leveraged position is open, monitor it regularly. Pay attention to market movements and adjust stop-loss orders as needed to protect against potential losses. Close the position manually or wait for the take-profit order to be triggered.

Step 7: Close Your Position

When you are ready to exit your leveraged position, simply close it by placing an opposing order. For example, if you opened a long position, place a sell order to close it. Alternatively, you can set a take-profit order to automatically close the position when the desired profit target is reached.

Step 8: Withdraw Your Profits

After closing your leveraged position, you can withdraw any profits earned. DigiFinex has several withdrawal options available. Choose the method that suits you best, such as bank transfer, credit card, or cryptocurrency.