AscendEX leverage trading principle

When enabling leverage trading on AscendEX, select your desired leverage ratio, choose a trading pair, open a position with leverage, and manage it by adjusting, closing, or setting stop-loss orders.

Dec 01, 2024 at 09:50 am

AscendEX Leverage Trading Principle

Introduction

Leverage trading is a powerful tool that can amplify both profits and losses in the cryptocurrency market. By borrowing funds from a broker, traders can increase their trading positions beyond their initial capital. However, it is important to understand the risks involved before engaging in leverage trading.

How Leverage Trading Works

Leverage is expressed as a ratio, such as 5x, 10x, or 20x. A leverage of 10x means that a trader can borrow up to 10 times their initial investment. For example, with a $1,000 account balance and 10x leverage, a trader could open a position worth $10,000.

When a trader uses leverage, their profits and losses are magnified by the leverage ratio. For example, if a trader opens a $10,000 position with 10x leverage and the price of the asset increases by 10%, their profit would be $1,000 (10% x $10,000). However, if the price of the asset decreases by 10%, their loss would also be $1,000.

Risks of Leverage Trading

• Liquidation: If the price of the asset moves against the trader's position, they may be liquidated. Liquidation occurs when the trader's equity falls below a certain level, known as the maintenance margin.
• Margin Calls: Before liquidation occurs, the trader may receive a margin call. A margin call is a notification from the broker that the trader needs to add funds to their account to maintain their position.
• Unlimited Losses: Unlike traditional trading, losses in leverage trading can exceed the trader's initial investment. This is because the trader is borrowing funds from the broker, and the broker has the right to liquidate the trader's position at any time.

Steps to Leverage Trading on AscendEX

1. Enable Leverage Trading: Before you can leverage trade on AscendEX, you need to enable leverage trading in your account settings. To do this, go to "Settings" > "Trading" > "Leverage Trading" and select the amount of leverage you want to use.
2. Choose a Trading Pair: Once you have enabled leverage trading, you can choose a trading pair to trade. AscendEX offers a wide range of trading pairs, including BTC/USDT, ETH/USDT, and XRP/USDT.
3. Open a Position: To open a position, click on the "Trade" button and enter the amount of leverage you want to use. You can also enter the amount of the asset you want to buy or sell.
4. Manage Your Position: Once you have opened a position, you can monitor its progress and adjust it as needed. You can add or remove leverage, close your position, or set stop-loss orders to limit your losses.

Conclusion

Leverage trading can be a powerful tool for increasing profits, but it is important to understand the risks involved before using it. By following these steps, you can minimize the risks and maximize your chances of success.