What is the Difference Between Maximum Bitcoin Trading Leverage & Used Bitcoin Trading Leverage?
You should note that there is a difference between maximum bitcoin trading leverage ( bitcoin leverage given by your broker which is the highest leverage you can trade with if you choose to) & used bitcoin trading leverage ( bitcoin leverage depending on the lots you have opened/open trade positions). One is the broker's (Maximum) & the other is trader's (Used). To explain this concept we shall use the cryptocurrency trading example above:
If your broker has given you 100:1 Maximum leverage, but you only open trading lots of 100,000 dollars then Used bitcoin trading leverage is:
100,000 dollars : 10,000 dollars (your money)
10:1 Used Bitcoin Trading Leverage
You have used 10:1 leverage, but your maximum leverage is still 100:1. This means that even if you are given 100:1 Maximum bitcoin trading leverage or 200:1 Maximum bitcoin trading leverage , you do not have to use all of it. It is best to keep your used leverage to a maximum of 10:1 but you'll still choose 100:1 maximum leverage option for your account. The extra bitcoin trading leverage will give you what we call Free BTCUSD Margin, As long as you have some Free margin on your trading account then your trades will not get closed by your broker because this margin requirement will remain above required level.
When it comes to trading bitcoin trading one of your bitcoin trading rules: money management guidelines on your bitcoin trading plan should be to use below 5:1.
Bitcoin Trading Leverage Example
The example illustrated below, the set leverage is 100:1, the margin which is 1% is $2683.07, therefore the total amount controlled by the trader is: $268,307 - this is because with this leverage the trader has used little of his money & borrowed the rest, with this set at 100:1, the trader is using 1% of their capital, this 1% is equal to $2683.07, if 1% is equivalent to $2683.07 then 100% is $268,307
What's the Difference Between Maximum Crypto Trading Leverage & Used Crypto Trading Leverage?
In the above image example, the trader is using $2683.07, total controlled amount is $268,307, but account equity is 16,116.55, therefore used btcusd leverage is ( $268,307 divide by 16,116.55 ) = 16.64 : 1
16.64 : 1
In the account above even though the maximum bitcoin leverage set bitcoin trade leverage is 100:1, Used bitcoin leverage is 16.64 : 1
