What Is Leverage in Futures Trading?
Leverage allows traders to open larger positions with a smaller amount of capital. It is typically expressed as a multiple, such as 10x, 20x, or 50x.
A higher leverage ratio amplifies both potential profits and potential losses, so it should be used with caution.
Example
If you are trading BTC/USDT, here’s how leverage works:
- Using 10x leverage: $1,000 in margin allows you to open a $10,000 position.
- Using 50x leverage: $1,000 in margin allows you to open a $50,000 position.
Key Points About Leverage
- Amplified Exposure: Leverage increases both profit and risk exposure. It magnifies price changes, so proper risk management is essential.
- Impact on Liquidation Price: Higher leverage reduces the margin buffer and brings the liquidation price closer to the entry price.
- Margin Requirement: To avoid forced liquidation, ensure that your account has adequate margin at all times.
How to Set Leverage on the Bitunix App
Step 1: Go to the Futures Trading Page
Open the Futures Trading page and select your desired trading pair.
Step 2: Locate the Leverage Option
Find the leverage setting, typically displayed as a multiple (for example, “50x”). Tap it to open the leverage adjustment window.
Step 3: Adjust the Leverage
Use the slider or manually enter your desired leverage value. Click Confirm to apply the new settings.
Tip: It is recommended to use the same leverage for both long and short positions.
How to Adjust the Leverage of an Existing Position
Step 1、Tap the leverage indicator displayed near your open position (for example, “20x”).
Step 2、Move the slider or input the new leverage manually, then click Confirm to save the change.
How to Set Leverage on the Bitunix Web Platform
Step 1: Go to the Futures Trading Page
Open the Futures Trading section and select the currency pair you want to trade.
Step 2: Locate the Leverage Adjustment Button
Find the leverage adjustment option, shown as a number such as “50x.” Click it to open the Adjust Leverage window.
Step 3: Adjust the Leverage
Use the slider or type in the desired leverage value. Click Confirm to apply the change.
Tip: It is recommended to use the same leverage for both long and short positions.
How to Adjust the Leverage of an Active Position
Step 1、Click the leverage displayed on the position (for example, “25x”).
Step 2、Enter the new leverage value or use the slider, then click Confirm to update.
Tips for Using Leverage Effectively
- Start with Low Leverage: New traders should begin with smaller leverage ratios to minimize risk.
- Monitor Margin Levels: Always ensure your available margin is sufficient to prevent forced liquidation.
- Use Risk Management Tools: Combine leverage with stop-loss and take-profit orders to control risk.
- Understand Your Risk Exposure: Avoid using excessive leverage that could amplify losses beyond your intended risk.
FAQs
1. What is the maximum leverage available on Bitunix?
Bitunix supports leverage of up to 125x for specific trading pairs, depending on market conditions.
2. Can I change my leverage after opening a position?
Yes. You can adjust leverage even after opening a position. The change affects your margin requirements but not your position size.
3. Does higher leverage mean higher profits?
Higher leverage can amplify profits but also increases the risk of significant losses and brings the liquidation price closer.
4. Is there a fee for adjusting leverage?
Adjusting leverage is free; however, margin requirements will automatically adjust according to the new leverage level.
5. How does leverage affect liquidation risk?
The higher the leverage, the smaller the margin buffer, which brings the liquidation price closer to the entry price.
Disclaimer
This article does not provide:
(i) investment advice or investment recommendations;
(ii) an offer or solicitation to buy, sell, or hold digital assets;
(iii) financial, accounting, legal, or tax advice.
Digital assets, including stablecoins and NFTs, involve high risk and may fluctuate significantly. Consider whether trading or holding digital assets is appropriate for you given your financial situation. Consult a qualified legal, tax, or investment professional when needed. You are responsible for understanding and complying with applicable local laws and regulations.