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RE: The Risk Of Leverage Trading

in Project HOPE5 years ago

I hope you don't get me wrong. Leverage is a double edge sword and it can be useful for capital intensive investments. For instance, when you buy a property in Singapore, you pay 20% downpayment and the rest are loan. This in a way is a already a leverage. Also, leverage is needed in investments like Forex where the percentage move is small.

I do not think crypto investments need too further leverage because it is already volatile in nature. The most I can accept is to take up some DeFi loans and use that additional funds to buy more crypto. Haha..

As the first video pointed out, there are people who 100x leverage for their crypto trades. This is highly risky if the traders do not know what they are doing. One of the possible reasons we see so much price volatility is because of manipulation by leverage trading platforms like Bitmex. These platforms profit from liquidated positions, hence, it is in their interest to create sudden opposite price movements when positions are too stacked to one side.

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Thanks for spreading your knowledge as it does alert newbies like me who haven't really learn so much with the different types of trading available. For me, leverage trading is too risky since I am not single so I have a family to consider. High risk should never be in my dictionary. One of the regular investment is actually the regular buying of Nikko AM Singapore STI ETF through DBS bank that deduct via Giro monthly from my account. It is supposed to be better as we are buying regardless of market up or down. I guess this is what they call cost averaging. 😁 Feel free to share your knowledge with me whenever I write about crypto-related articles.