How to use 20x leverage in BigONE

When navigating 20x leverage trading on BigONE, traders must cautiously assess volatility, liquidity, and their risk tolerance to mitigate potential losses in the highly leveraged environment.

Nov 26, 2024 at 05:22 am

Navigating the Perils and Rewards of 20x Leverage Trading on BigONE

Overview

Leverage trading is a powerful tool that can magnify both profits and losses. By using leverage, traders can amplify their market exposure with borrowed capital, enabling them to potentially increase their returns. However, leverage also amplifies risks, making it crucial to approach such trading with caution and a comprehensive understanding of its mechanics.

Understanding Leverage and its Implications

• Leverage is expressed as a ratio, such as 10x, 20x, or 50x. A 20x leverage ratio indicates that for every $1 of capital you invest, you can trade with up to $20 worth of assets.
• While leverage can enhance potential profits, it also magnifies losses. A 20x leverage ratio means that a 10% decline in the underlying asset's value would result in a 200% loss of your invested capital.
• Margin calls occur when leveraged positions experience a substantial loss and traders are required to add additional funds or risk liquidation.

Step-by-Step Guide to 20x Leverage Trading on BigONE

1. Choose an Appropriate Trading Pair

• Not all assets on BigONE support 20x leverage. Double-check the platform's supported trading pairs before selecting a market.
• Consider the volatility and liquidity of the asset you wish to trade. High volatility and low liquidity can exacerbate leverage risks.

2. Activate 20x Leverage

• Navigate to the "Futures" section on BigONE.
• Select the desired trading pair.
• In the order form, adjust the "Leverage" field to "20x".

3. Open a Position

• Specify the order type (e.g., limit order, market order).
• Determine the entry price and quantity.
• Ensure you fully comprehend the potential risks and have sufficient funds in your account to cover potential losses.

4. Manage Your Position

• Monitor your position regularly, watching for price movements and the potential need for adjustments.
• Use stop-loss orders to cap potential losses if the market moves against you.
• Close your position when you have achieved your desired outcome or the market conditions dictate.

5. Understand Liquidation Risks

• When losses exceed a critical threshold, BigONE may force-close your position through liquidation.
• The platform's liquidation engine calculates the "Initial Margin" and "Maintenance Margin" for each leveraged position.
• If the position's equity falls below the "Maintenance Margin" level, liquidation is triggered.

6. Monitor Margin Levels

• The "Margin Level" indicator reflects the health of your leveraged position.
• A Margin Level below 100% signifies potential liquidation risk.
• Add additional funds or consider reducing leverage if the Margin Level becomes concerning.

7. Leverage as a Double-Edged Sword

• Used judiciously, 20x leverage can amplify profits.
• However, the risks are equally amplified, requiring careful risk management and financial discipline.
• Leverage trading is not suitable for all traders, especially those lacking experience or a solid understanding of market dynamics.