How to increase leverage in Bithumb

To increase leverage on Bithumb, traders can create a margin trading account, set their desired leverage level, fund their account, and place a leveraged trade while carefully managing their risk.

Nov 12, 2024 at 09:14 am

How to Increase Leverage in Bithumb

Leverage is a trading technique that allows traders to amplify their potential profits by borrowing funds from a broker or exchange. In the context of cryptocurrency trading, leverage refers to the amount of borrowed funds that a trader can use to multiply their trading positions.

Important Note: Leverage trading carries significant risks and is not suitable for all traders. It is crucial to understand the risks involved and trade responsibly.

Understanding Leverage on Bithumb

Bithumb, a popular South Korean cryptocurrency exchange, offers leverage trading for selected cryptocurrencies. The maximum leverage available on Bithumb varies depending on the cryptocurrency and the user's account level.

• Margin Trading: Margin trading on Bithumb allows traders to borrow up to 5x leverage for select cryptocurrencies. This means that traders can trade with up to 5 times the amount of funds they have in their trading account.
• Cross Margin: Cross margin trading on Bithumb allows traders to borrow funds from a central pool to increase their leverage. The available leverage is calculated based on the combined balance of all cryptocurrencies in the trader's account.

Steps to Increase Leverage in Bithumb

1. Verify Your Identity: To enable margin trading on Bithumb, users must complete the identity verification process. This typically involves submitting personal information, such as your passport or driver's license, and proof of residence.
2. Create a Margin Trading Account: Once your identity is verified, you can create a margin trading account. This account will be separate from your regular trading account and will allow you to borrow funds for leverage trading.
3. Set Your Leverage Level: After creating a margin trading account, you can set your desired leverage level. The maximum leverage available will depend on the cryptocurrency you are trading and your account level.
4. Fund Your Account: You will need to deposit funds into your margin trading account in order to use leverage. These funds will serve as collateral for your borrowed funds.
5. Place a Leveraged Trade: Once you have set your leverage level and funded your account, you can place a leveraged trade. Remember to carefully consider the potential risks involved and only trade with an amount of funds that you can afford to lose.
6. Monitor Your Positions: It is essential to monitor your leveraged positions closely. Leverage amplifies both profits and losses, so it is important to manage your risk accordingly. Bithumb provides tools to help you track your borrowed funds, realized profit/loss, and liquidation price.
7. Manage Your Risk: Leverage trading involves significant risks, so it is crucial to implement risk management strategies. This includes setting stop-loss orders, using leverage in moderation, and diversifying your trading portfolio.

Additional Tips for Leveraged Trading

• Understand Liquidation: When trading with leverage, traders must be aware of the concept of liquidation. If the value of your traded asset drops significantly, your position may be liquidated, resulting in losses.
• Use Stop-loss Orders: Stop-loss orders are essential for limiting losses in leveraged trading. These orders automatically close your position when the asset price reaches a predetermined level.
• Monitor Market Volatility: Leverage trading can be particularly risky during periods of high market volatility. Before entering a leveraged trade, assess the overall market conditions and adjust your strategy accordingly.
• Don't Overtrade: It is tempting to overtrade when using leverage, but this can lead to substantial losses. Only trade with an amount of funds that you can afford to lose and stick to a defined trading plan.