Exchanges such as BTSE offer the ability to trade with leverage. BTSE features the option for leverage from 1x to 100x. This basically means you can trade with more funds than you actually have available.
For example, say you are trading BTSE’s Bitcoin (BTC) perpetual futures product, and you want to enter a 1 BTC long position (1,000 contracts). Using 100x leverage, you can enter that position using only 0.01 of your BTC capital.
In terms of USD, if Bitcoin trades at $10,000, you can enter a 1 BTC position with only $100 of the capital you hold in your Bitcoin perpetual futures wallet.
The use of leverage on BTSE only applies to its derivatives trading products. Leverage does not apply to spot asset trading on BTSE.
*The image above is from BTSE Testnet. The numbers shown are not real funds.
To manage your leverage amount for the derivative product you are trading, look to the left side of the screen. The leverage setting can be found below your order details, circled in red above.
(Cross margin does not amplify your funds, but allows for the ability to draw funds from other wallets on the BTSE exchange, instead of just drawing from each specific trading product wallet.)
Using LeverageLeverage has the potential to be a helpful tool in your trading process. It is crucial, however, to exercise caution while using leverage. Leverage allows you to trade larger position sizes, although each loss is also amplified.
If you enter a 1 BTC long futures position (1,000 contracts) using $100 at 100x leverage while Bitcoin trades at $10,000, you are responsible for the price action of one entire Bitcoin while only having $100 in that trade to back that position.
If Bitcoin’s price drops down to $9,900 while you are in that long position, you are liquidated. You lose that entire $100 and your position closes. Therefore, your position depends on the amount of capital you have in your wallet to back that position.
Leverage also affects your shown profit or loss percentage, which is based on the amount of capital you allocate for each trade.
Say you enter a 1,000 contract Bitcoin perpetual futures long position (equal to 1 BTC) while BTC trades at $10,000, using $100 at 100x leverage. If Bitcoin moves up to $10,100, your open long position shows a 100% profit.
You only allocated $100 to that long position but are trading the price action of one entire Bitcoin, due to your 100x leverage setting. Therefore, with BTC trading at $10,100, you are $100 in profit, which is 100% of the capital you put into that position.
If you add 1 BTC (1,000 contracts) to this same long position using $1,010 at 10x leverage while BTC trades at $10,100, your leverage shown below your wallet balance (circled in red in the image above) adjusts, averaging out to show the total amount of leverage in play for your entire position.
Additionally, margin also relates to leverage. Margin is the amount of funds used from your wallet for any given position or order. While trading Bitcoin futures, if you go long 1 BTC with $100 at 100x leverage while BTC trades at $10,000, your margin for that position is $100.
The margin used in any given position is also shown under your open position details. The required margin for orders is shown under order details on the left side of the screen.