What is Futures Trading with Leverage?
When it comes to trading, leverage and margin are two important concepts that you need to understand. In this article, we'll take a closer look at both of these concepts and how they can be used when trading Perpetual Futures on Biqutex.
When it comes to trading, leverage and margin are two important concepts that you need to understand. In this article, we'll take a closer look at both of these concepts and how they can be used when trading Perpetual Futures on Biqutex.
Leverage is a tool that can be used to increase your potential profits (or losses) on a trade. It essentially allows you to control a larger position than what you have the capital for. For example, if you have $1,000 and you're trading with 10x leverage, you're effectively controlling a $10,000 position.
Margin is the amount of money that you need to put up in order to open a position. For example, Biqutex requires you to have at least 0.4% of the value of the contract in your account to trade.
Now that we've covered the basics, let's take a look at how these concepts can be used when trading Futures.
When you trade Bitcoin Perpetual Futures, you're essentially making a bet on the future price of Bitcoin. If you think the price of Bitcoin will go up, you can buy (long) a contract. If you think the price of Bitcoin will go down, you can sell (short) a contract.
One of the great things about trading BTC Perpetual Futures is that you can use leverage to magnify your potential profits (or losses). For example, if you're trading with 20x leverage and the price of Bitcoin goes up by 1%, your account will increase by 20%. Conversely, if the price of Bitcoin goes down by 1%, your account will decrease by 20%.
That way, if the Bitcoin price goes up just 5% you will have already doubled your initial investment of $500 to $1000 (500$ profit). Of course, leverage can also work against you. If the price of Bitcoin moves against your position, your account can quickly get wiped out. That's why it's important to use leverage responsibly and always have a stop loss in place.
When trading BTC Perpetual Futures, the margin requirement is usually around 5%. That means you need to have $5,000 in your account in order to trade a $100,000 position. However, some exchanges allow you to trade with less than 5% margin. For example, Biqutex allows you to trade with up to 125x leverage. That means you only need $1,000 in your account to trade a $125,000 position.
Biqutex Exchange
Biqutex is an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!
While high leverage can lead to high profits (or losses), it's important to remember that it also increases your risk. So, only use as much leverage as you're comfortable with and always have a stop loss in place.
Biqutex uses a margin system with different levels depending on the value of the trader's position. The larger the trader's position, the higher the initial margin rate at which the position is opened. This means that the higher the value of the contract held by the trader, the lower the maximum available leverage. Each contract has a certain maintenance margin rate, and the margin requirements will increase or decrease as the risk limit changes.
When the margin is lower than the maintenance margin, an automatic liquidation will occur. It is highly recommended that traders liquidate their positions above the maintenance margin to avoid higher automatic liquidation fees.
In conclusion, leverage and margin are two important concepts that you need to understand when trading Futures. Leverage allows you to control a larger position than what you have the capital for and margin is the amount of money that you need to put up in order to open a position. Use these concepts responsibly and always have a stop loss in place to protect your account.
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